ISG group collapse: key considerations

Heidi Brennan, partner and head of the Construction and Engineering team at Lodders, looks at the impact of ISG group’s collapse on the construction sector and considers next steps for employers, subcontractors and suppliers affected.

On 20 September 2024, eight companies in the ISG group entered administration, representing the biggest collapse in the construction sector since Carillion. The fallout is expected to affect many of the subcontractors and suppliers linked to the company, particularly those with longer payment terms, potentially leaving them vulnerable to their own financial difficulties.

It is thought that ISG group has approximately 150 active sites across the UK, meaning delays to projects will be likely and employers will need to identify new contractors to complete unfinished projects.

The aftermath has also created tremors in the bond market, with other contractors already nervous of the tightening restrictions they will now face. Whilst still representing a huge hit to the bonding market, as reported by Construction Enquirer, surety providers have managed to contain losses at around £60m.

Unfinished projects

If you are an employer left with an unfinished project, there are immediate steps you should take:

• secure the site and materials
• read the contract and do what it says!
• check insurance cover
• review bond security or guarantees (if any)
• ensure you have copies of all sub-contracts and supply agreements 

Registering as a creditor

If you were a supplier or contractor to one of the ISG companies in administration and are owed money, you should register as a creditor. Known creditors should be approached by the administrators imminently.

You are classed as a creditor if:

• you have not been paid for goods or services you’ve supplied to them
• you have paid the ISG companies for goods or services that you have not received

If you are a creditor, you should ensure you have a record of all outstanding payments and the dates they were due. For further information, click here.

Expert legal advice

If you are an employer or a sub-contractor affected by the ISG group collapse, it is important to review your contract and look closely at your obligations. You may have the right to terminate, but it’s essential to consult expert legal advice before terminating any contract to ensure compliance with the correct procedures.

We understand that it is a worrying and challenging time for businesses affected by this news. Lodders’ expert Construction and Engineering team is on hand to provide confidential support and specialist advice to help you with next steps. We can also help you protect your business for the future by reviewing your current contracts.

Get in touch with us today.