Torsion Construction entered administration on 29 July 2026. The Leeds contractor, which worked across student accommodation and build-to-rent projects, had grown turnover from £57m in 2023 to £165.4m in 2025, with around 115 employees.
Then the position changed sharply.
In its 2026 trading period, Torsion recorded a loss of £847,000 on turnover of £78m, compared with a pre-tax profit of £497,000 on £165m in the previous year. Rising costs, a slower market and site-specific overspend and delay all contributed to the pressure.
The administrators, James Clark and Howard Smith of Interpath, have reported approximately £20m owed to unsecured creditors, including around £15.7m to trade creditors. Hundreds of suppliers are understood to be affected, and the administrators say unsecured creditors are highly unlikely to receive anything.
That is the part every contractor and subcontractor should consider carefully. This is not primarily a story about a failed contract clause or a missed compliance obligation. It is about what happens when the customer who owes you money can no longer pay.
The dominoes are still falling. Torsion Developments entered receivership in September, and on 21 September 2026, Torsion Projects filed a notice of intention to appoint an administrator. Torsion Projects had reported turnover of £47m and a pre-tax profit of £505,000 for 2024, and specialised in care homes, retirement living and residential work, much of it for sister company Torsion Care.
For contractors reviewing their construction contractor insurance, there are five practical checks to make now.
1. Do you have trade credit insurance?
Most contractors understand public liability, employers’ liability and contract works insurance. Far fewer have trade credit insurance.
That matters because trade credit insurance is designed to respond when a business customer fails to pay because of insolvency or prolonged default. For a subcontractor, the customer may be the main contractor. For a main contractor, it may be the developer or employer.
A £15.7m trade creditor pool with little or no expected recovery is exactly the type of loss this form of cover is intended to address. It is not a replacement for liability insurance, and it does not pay for defective workmanship or poor project performance. It protects the receivable, subject to the policy terms.
When reviewing a policy, ask:
- Is the cover written on a whole-turnover basis or only for named buyers?
- Is the contractor or developer you are working for approved by the insurer?
- What credit limit has been set for that buyer?
- Are you already above the approved limit because of unpaid applications, retentions or variations?
- What is the maximum extension period for overdue debt, commonly 90, 120 or 180 days?
- What are the deadlines for notifying overdue invoices, adverse information and insolvency?
- What excess applies?
- Are retentions, certified sums, agreed variations and applications for payment included?
The important point is that trade credit cover is not automatic simply because you have bought a policy. If the debtor is not approved, the credit limit is too low, or notification conditions are missed, the expected protection may not be available.
Construction-specific wordings can sometimes address exposure beyond ordinary invoices, including work completed, applications, variations and retention balances. But those items must be agreed and documented. Never assume they are covered because the schedule says “trade credit”.
2. Remember that retentions are not held in trust
A 5% retention can look manageable when viewed against one project. Across several sites, it becomes a material loan to the main contractor.
At present, retention money is not generally required to be held in trust for subcontractors. If the contractor becomes insolvent, the retention can sit in the same unsecured creditor pool as unpaid invoices. You may have completed the work, released labour and materials, and met every obligation, yet still lose the money held back.
That is why I think contractors should stop treating retentions as a safety net. In practice, they are often an unsecured loan to the payer.
Possible alternatives include:
- Retention bonds
- Retention replacement guarantees
- Retention insurance
- Construction-specific trade credit insurance that expressly includes retention balances
The proposed Commercial Payments Bill is intended to prohibit the deduction and withholding of retentions in construction contracts. It also proposes maximum payment terms of 60 days and mandatory interest at 8% above the Bank of England base rate for late payments. However, the legislation is not yet in force and the timing for the retention measures remains subject to consultation and transition arrangements.
In practical terms, contractors cannot wait until around 2030 and hope the law solves today’s cash-flow exposure. Review your existing retentions now, identify where the balances sit and ask what would happen if each payer entered administration tomorrow.
3. Establish whose insurance responds if the project stops
If a main contractor fails halfway through a project, the immediate problem is not only unpaid money. There may be completed works, materials on site, unfixed materials, hired plant and temporary works exposed to damage, theft or weather.
This is where the distinction between contract works insurance and trade credit insurance becomes important.
Contract works or contractors’ all risks cover generally responds to physical loss or damage to the works. It does not pay you simply because a customer owes you money. A project can be perfectly undamaged but still leave you with a substantial unpaid application.
Check whether the project is insured under:
- Your own contract works policy
- The employer’s arrangement
- A joint names policy
- A project-specific policy with particular endorsements
If the arrangement is based on the employer insuring the works, sometimes described through a DE4-style structure, confirm what happens if that employer or developer enters administration. Do not rely only on a statement that your interest is noted. Ask for the actual policy position.
You should also establish:
- Whether materials on site and unfixed materials are insured
- Who covers your plant and hired-in plant
- Whether the policy remains effective after the employer’s insolvency
- Who has authority to access and secure the site
- Whether you can recover your materials, equipment and temporary works
- Whether your subcontract gives you a right to enter the site
A joint names arrangement can protect the physical works, but it does not guarantee payment of your contract sum. That is a separate financial risk.
4. Test cash flow, payment terms and your own insurance arrangements
The latest Payapps research surveyed 127 UK subcontractor professionals and gives a useful picture of the pressure in the payment chain.
It found that:
- 79% wait longer than they should to be paid
- 73% experience payment process disputes
- 29% have avoided working with a contractor because its payment process was too difficult
- 84% say a contractor’s payment reputation affects whether they bid or price future work
- 68% have increased rates or added a risk margin because of slow or unreliable payments
This is not just an administrative inconvenience. It affects pricing, capacity, borrowing and insurance.
Before bidding for work, credit-check the main contractor or developer. Use credit reports and early warning services such as Red Flag Alert-style monitoring. Check County Court Judgments, insolvency applications and changes in filing behaviour. Set an internal exposure limit for each customer rather than allowing one apparently successful relationship to absorb an ever-growing balance.
Do not rely on “we have worked with them for years”. Torsion’s growth and previous trading performance did not prevent a rapid reversal when lending was withdrawn, invoice discounting support was removed and approximately £6m of additional funding could not be raised.
You should also review your own insurance payment arrangements. If premiums are funded by instalments, a bad debt month can put those payments under pressure. An unpaid invoice may also reduce turnover, change your exposure profile and affect renewal discussions.
Document overdue invoices promptly and follow the notification requirements under any trade credit policy. The same discipline applies to applications, certificates, variations, retention records and correspondence.
5. Review group company and related-party exposure
Torsion shows why checking one company name is not enough.
Torsion Construction’s administration was followed by receivership action involving Torsion Developments and now an administration notice from Torsion Projects. The companies may be legally separate, but their commercial relationships, projects, funders and cash flows can still be closely connected.
Before accepting work from a group, ask:
- Which company is actually signing the contract?
- Is that the trading company, the asset-owning company or a project company?
- Is there a parent company guarantee?
- Does the guarantee come from a company with real assets?
- Are payment obligations supported by a funder or only by another group entity?
- Are intercompany balances genuinely recoverable?
In Torsion’s case, approximately £15.7m was reportedly owed to the business by related companies, and administrators are pursuing those balances. That figure is a reminder that money moving around a group is not necessarily money available to pay subcontractors.
Direct payment arrangements can also complicate matters. Torsion’s directors arranged for development funders to pay some subcontractors directly, which protected certain supply chain payments but reduced the company’s working capital. If you agree to direct payment, record who is contractually responsible, which debt is being discharged and who carries the insurance obligations.
Your general contractor liability insurance is not designed to absorb a customer’s bad debt. Consider how it should sit alongside commercial combined protection, trade credit insurance and legal expenses cover for contract disputes, adjudication and debt recovery. The exact response depends on the wording, so it needs to be reviewed rather than assumed.
The paperwork can change the outcome
The Torsion position is serious, but it is not proof that every insolvency produces the same result. Reporting around Jerram Falkus suggests that subcontractors may receive a partial payout, depending on asset recoveries and the administrators’ assessment.
That contrast matters. The paperwork you hold can affect whether your claim is recognised, whether you can prove the amount owed and whether another route to recovery exists. Keep signed contracts, payment applications, certificates, variations, retention schedules, notices and correspondence together and accessible.
For contractors in Essex, Kent and London, the wider lesson is straightforward. We regularly see businesses with strong liability insurance but no protection if the customer stops paying. That is one of the most common gaps in an otherwise respectable insurance programme.
At Moyak Insurance Services, our approach is individual because every order book and supply chain is different. We care about every client, and we work with the UK’s leading master insurance brokers to find suitable protection for the risk and budget, often helping small businesses secure better value than they expect.
Bring us your order book and payment terms. We can look at where the real exposure sits, which customers create concentration risk and whether your current business insurance responds to the risks you actually face.
This article provides general information only. It is not advice on a specific contract, insolvency, insurance policy or claim. Contractors should obtain appropriate legal, financial and insurance advice before making decisions.
Sources: Interpath and Torsion creditor reporting, Torsion Projects administration notice, Companies House filings for Torsion Developments, Payapps subcontractor payment research and the Government’s Commercial Payments Bill overview.