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Liquidators no longer able to use adjudication in construction contract disputes

24 August 2018

A recent case

Has said that liquidators can't use the right to adjudication in construction contracts as a way of cheaply settling disputes.  In effect when a company goes into liquidation, individual claims are no longer capable of being enforced and are replaced by one single claim.

This single claim is not a dispute under a construction contract, but a calculation under the Insolvency (England and Wales) Rules 2016 (IR16), Consequently therefore an adjudicator has no jurisdiction to hear the claim. 

This means that the liquidator will have to commence proceedings separately on behalf of creditors which will be more expensive and time consuming.  Ultimately that means that solvent counter parties to the liquidation will find it easier to resist requests from the liquidator.  This might mean that recovery for creditors will be less.

Categories: Creditors Voluntary Liquidation CVL

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