Your Main Contractor Just Went Bust: The £5m Ardmore Lesson Every Subcontractor in Essex and London Needs to Learn

When a main contractor enters administration, the immediate concern for a subcontractor is usually simple: who is going to pay my invoice?

The wider consequences are more complicated. You may be left with unpaid applications, held retentions, materials on site, staff and plant committed to a project, and uncertainty over whether you can continue working. You may also discover that the insurance arrangements you relied on were placed in the main contractor’s name and do not give you the protection you expected.

The recent administration of Ardmore Construction Group brings this into sharp focus.

Ardmore, a group with reported turnover of around £344 million, entered administration in June 2026 after losing a judgment requiring it to pay approximately £14.9 million to Crest Nicholson. The dispute related to cladding and fire-safety defects at 19 residential buildings at Admiralty Quarter in Portsmouth.

The group was one of seven linked companies held responsible under a Building Liability Order. Administrators from BTG said the group entered administration before Crest could obtain a final charging order, as part of a wider strategy involving group companies subject to the same ruling. An appeal is still being considered.

The result for the supply chain is particularly uncomfortable. Around £5.1 million is owed to subcontractors, while approximately £1.8 million is owed to 132 former employees. The administrators do not expect unsecured creditors to recover any cash.

For smaller contractors across Essex, Kent and London, the lesson is not that every major contractor is about to fail. It is that your exposure is often much larger than the invoice currently sitting in your accounts system.

When the main contractor fails, subcontractors usually rank behind others

A subcontractor owed money by an insolvent main contractor will commonly be treated as an unsecured creditor. That generally places the subcontractor behind secured lenders and preferential creditors, which can include certain employee claims.

In practical terms, this may mean:

• Unpaid applications are not paid in full.
• Retentions may be delayed or lost.
• Disputed variations become harder to resolve.
• Materials supplied on credit may not be recovered.
• Work in progress may be taken over by a replacement contractor.
• The subcontractor may have to fund wages, suppliers and overheads while waiting for an uncertain dividend.

This is why a profitable project can still create a serious cash-flow problem. Your accounts may show a healthy turnover, but if one main contractor represents a large part of your unpaid ledger, the business can become exposed very quickly.

Ardmore’s administration report listed millions of pounds in assets tied up in debtors, retentions and work in progress. Even so, estimated recoveries were limited and unsecured creditors were expected to receive nothing. The presence of assets does not necessarily mean there will be money available for the supply chain.

The earlier article, Your Subcontractor Just Went Bust, looked at the risk from the main contractor’s perspective. Ardmore shows the other side of the problem: the main contractor’s failure can transfer the financial shock directly to smaller firms below it.

Contract terms can decide how much protection you have

Insurance cannot replace a properly negotiated construction contract. Before accepting work, subcontractors should understand the provisions that will apply if the main contractor stops paying or becomes insolvent.

Pay-when-paid and pay-if-paid clauses are an obvious starting point. Their operation depends on the contract wording and applicable law, but they can affect whether payment to you is linked to the main contractor being paid by the employer.

You should also examine:

• Retention percentages and release dates.
• Set-off rights and the process for disputing deductions.
• Termination provisions.
• Step-in rights for the employer or funder.
• Direct agreements with the employer.
• Collateral warranties.
• Parent company guarantees.
• Requirements to provide bonds or guarantees.
• Rights to remove your plant and materials from site.

A direct agreement or collateral warranty will not automatically guarantee payment, but it may create a direct relationship with another project party. A parent company guarantee may provide an additional route to recovery if the contracting entity fails, although its value depends on the guarantor’s financial position and the terms agreed.

The important point is to review these documents before the project starts. Once a main contractor is already showing signs of distress, your negotiating position is usually much weaker.

Project insurance may not protect you if you are not properly included

Some projects are insured under arrangements placed by the main contractor. Subcontractors may assume that being appointed to the project means they are automatically protected.

That assumption can be unsafe.

Check:

1. Who is named as an insured party?
2. Are subcontractors included, and in what capacity?
3. Does the policy contain non-vitiation wording?
4. Can one insured party’s conduct prejudice another insured party?
5. Does the policy continue if the main contractor enters administration?
6. Do you have direct rights to notify a claim?
7. Are your own contractual liabilities covered?
8. Are defective work, rectification and pure financial losses excluded?

A project policy may respond to physical damage to works in progress, but that does not mean it will pay an unpaid subcontractor invoice. Nor will it necessarily cover the cost of completing defective or unfinished work.

The legal and insurance position depends on the policy structure. However, the main contractor’s insolvency can make communication, claims notification and policy administration much more difficult. If you are relying on a project policy, it is sensible to understand your position while the contractor is still trading.

Trade credit insurance can protect key customer exposures

Trade credit insurance is designed to protect eligible debts when a customer becomes insolvent or, depending on the policy, fails to pay within an agreed period.

For a subcontractor, the relevant exposure may include:

• Certified invoices.
• Approved applications for payment.
• Materials supplied on credit.
• Contractual payments due from a main contractor.
• Certain debts affected by prolonged default.

The important detail is that trade credit insurance usually operates through debtor-level limits. Your policy may not provide the same amount of protection for every customer. An insurer may agree to cover £100,000 of exposure to one contractor but only £25,000 to another.

You also need to understand notification requirements. If you continue supplying a customer after a credit limit has been reduced, or fail to report overdue payments within the required period, the claim may be affected.

No insurance policy removes the need to monitor customers. In fact, the strongest approach combines credit checks, payment monitoring and sensible limits on exposure to any one main contractor.

The insolvency figures remain a warning for specialist trades

Construction recorded 3,841 company insolvencies in England and Wales in the 12 months to July 2026, representing around 17% of all cases where the industry was recorded. It was the largest total of any sector.

Specialist construction activities accounted for the largest share. This includes many of the trades that operate as subcontractors, including electrical and plumbing installation, plastering, painting, glazing, finishing and site preparation.

That matters because smaller firms often carry the greatest cash-flow pressure. They may have fewer customers, limited borrowing capacity and a high proportion of turnover tied to one or two major projects.

At the same time, professional indemnity rates are softening. WTW has forecast average construction PI rate reductions of around 5% to 10% in 2026, with reductions of up to 20% possible for well-managed risks.

That is welcome, but it should not be confused with a general reduction in construction risk. When premiums soften, differences in cover can become more important. A cheaper policy with a restrictive insolvency exclusion, inadequate limits or poorly described activities may offer less practical protection than expected.

Building safety claims can reach beyond one company

The Ardmore case also demonstrates why subcontractors need to understand the wider corporate group behind the name on their order.

A Building Liability Order can make a relevant liability of one company also become the liability of associated companies where the court considers that outcome just and equitable. In Ardmore, seven linked companies were held responsible, while administrators identified up to 23 further potential claims connected with historic work.

Those potential claims were estimated at as much as £300 million, although no judgments had been made on them at the time of reporting.

For subcontractors, this reinforces the need to identify the actual contracting entity, but also the group behind it. A project may be administered by one company, funded by another and supported by a parent or sister company. The corporate structure can affect guarantees, payment routes, insurance arrangements and the parties involved in a dispute.

Our related guide, Courts Can Now Reach Your Whole Company Group, explains the wider Building Liability Order implications.

The Building Safety Regulator also became an independent body in January 2026, with responsibility for the higher-risk building regime and Gateway process in England. This adds another formal compliance layer for projects where fire safety, structure and building information are closely examined.

A failure involving historic building work can therefore continue long after the original project has finished. Subcontractors should retain contracts, drawings, variations, inspection records, certificates and correspondence for an appropriate period, particularly where their work forms part of a higher-risk building.

A practical checklist for subcontractors

If a main contractor represents a significant part of your turnover, I recommend reviewing the following:

1. Identify your real contracting party. Check the legal name at Companies House, not just the trading name on site paperwork.
2. Monitor payment behaviour. Repeated late payments, unexplained certificate delays and requests for extended terms should be treated as warning signs.
3. Cap exposure to one main contractor. Set an internal limit for unpaid invoices, retentions and committed work in progress.
4. Review pay-when-paid and set-off clauses. Understand how they could affect recovery if the contractor fails.
5. Document every variation. Keep signed instructions, applications, delivery notes, photographs and completion records.
6. Check project insurance. Confirm who is insured and whether you have direct rights and non-vitiation protection.
7. Consider trade credit insurance. Ask about debtor-level limits, disputed invoices and reporting requirements.
8. Understand bonds and guarantees. Check who is protected by a payment bond or performance bond and how a call can be made.
9. Register as a creditor promptly. If administration or liquidation is announced, follow the administrators’ process without delay.
10. Review your own insurance wording. Make sure your Construction Contractor Insurance responds to your actual trade, contractual liabilities and project obligations.

Moyak Insurance Services helps businesses review Business Insurance Essex and Business Insurance London, including public liability, employers’ liability, professional indemnity, contract works, plant, tools and wider commercial cover.

Although General Contractor Liability Insurance is a term more commonly used in the US, the principle is familiar in the UK: your liability policy must reflect the contracts you sign and the work you actually undertake. A certificate alone is not enough.

Conclusion

The Ardmore administration is a reminder that the main contractor’s financial strength is part of your risk assessment. A large turnover figure does not guarantee that subcontractors will be paid, and assets held by an insolvent company may not produce a meaningful recovery for unsecured creditors.

The practical response is not to stop working with larger contractors. It is to control your exposure before the warning signs become impossible to ignore.

Know who you are contracting with, limit customer concentration, document your work, check project insurance and review your Construction Contractor Insurance against the risks your business is carrying today.

If you are concerned about a major customer, an unpaid invoice or the insurance arrangements on a current project, speak to your broker early. Once the administration notice has been issued, some options may already have disappeared.

This article is for general information only and is not legal or insolvency advice. The effect of contract clauses, bonds, guarantees and insurance policies depends on the wording and circumstances. Obtain professional advice on your specific position.

Frequently asked questions

What happens to a subcontractor when the main contractor goes bust?

A subcontractor will usually become an unsecured creditor for unpaid invoices and other sums due. Recovery may be limited or nil after secured and preferential creditors are dealt with.

Does Construction Contractor Insurance cover unpaid invoices?

Usually not. Liability and contract works policies generally respond to defined insured events, not simply to a customer’s failure to pay. Trade credit insurance may be more relevant for eligible unpaid debts.

Can trade credit insurance cover a main contractor’s insolvency?

It can, subject to the policy wording, debtor-level credit limits, waiting periods, notification requirements and any exclusions relating to disputed debts or continued trading after a limit is reduced.

Should subcontractors check the main contractor’s insurance?

Yes. Confirm who is insured, whether subcontractors are included, whether the policy contains non-vitiation wording and whether you have direct rights if the main contractor enters administration.

Can a Building Liability Order reach several companies in a group?

Yes. Where the statutory requirements are met, a Building Liability Order can extend a relevant liability to associated companies. The Ardmore case involved seven linked companies.

What insurance should a subcontractor review?

Depending on the trade and contractual obligations, this may include employers’ liability, public liability, products liability, contract works, tools and plant, professional indemnity, business interruption and trade credit insurance.