How claims consultants can help contractors with liquidation support
For main contractors, sub-contractors, and specialist contractors, when a company goes into bankruptcy, the last person you typically think to contact is a claims consultant. However, liquidation support is a way in which experienced consultants can help companies to pay creditors and help maintain civil communications within the industry to safeguard future interests.
Claims to pay its creditors
If your company has unresolved claims in motion, liquidators may see this as an opportunity to recoup capital. For that reason, they may request that these claims are pursued with a view to reaching a settlement. While auditors and accountants understand the principle of claims resolution in monetary terms, they typically do not have the expertise to assess realistic outcomes and follow a claim through.
The two issues with liquidators, auditors and accountants overseeing or handling this process are:
- They are not best placed to assess claims to see if they are worth pursuing
- They are not experienced in communicating with the construction industry and miscommunications will not achieve the best results
Safeguarding contractor interests
An experienced claims consultant is well-placed to review claims and assess realistic outcomes instead of wasting time and further resource on pursuing weak or invalid claims that will only cause further financial distress.
In our experience, the construction industry also reacts better to seasoned insiders rather than anonymous debt collectors. This is important, not only for achieving the best results today, but also for helping to preserve industry relationships for the future.
We have found over the years, that while financial experts are extremely talented in their field, as they are not experts in the construction industry. That can lead to misunderstandings about likely outcomes and timeframes. Again, an experienced claims consultant can help liaise and ‘translate’ situations to keep processes running smoothly and efficiently by advising on:
- Claims recovery
- Variation valuation
- And payment out-turn figures
Three steps in liquidation support
While a claims consultant can support companies at any stage of the liquidation process, in an ideal scenario we would suggest the following actions:
It’s worth enlisting the support of a claims consultant to conduct a thorough review of any outstanding claims to assess whether they warrant pursuing. For this reason, it’s advisable to keep them out of the liquidation process at this stage, if possible. This is an area in which we can advise.
Our claims consultants can work with the liquidator to assist in the recovery of monies.
Looking forward, as contractors and their companies seek to start afresh, we are here to help set up commercial checks and balances in your new company, so it does not fall into the standard traps of the construction industry. With this in mind, we can help with the following areas, as well as other tasks and specialist skillsets:
- Planning cash flow
- Assessing liabilities
- Assessing opportunities