Our Builder has gone bankrupt

SPECTRUM001

Hi there - unfortunately this is a bit of a cry for help, as sadly our renovation project has all gone a bit Pete Tong - and we are stranded up the creek.

To try and summarise, twelve months ago we started a £150k refurb (yes, that’s how much it costs !!) with a local reputable builder.

Quality of work has been a mixed bag, mainly due to lack of project mgmt, but we do have two bedrooms, kitchen and bathrooms done and looking smart (aside from some annoyances with incomplete glazing, electrics and plumbing).

Tons of other stuff is half done, and in a mess. We have a scaffold on the rear, which needs to be raised up to the second floor Dorma in order to finish sealing new windows, gutter work and decoration.

We have invested around £120k so far, which is accounted for aside from finishing a bunch of jobs with snagging.

The builder and his directors have been evasive of late, and then gave us news today they have filed for insolvency. In my mind, we are owed lots of completion on jobs we have already paid for, and will now have to find a new builder to pick up the pieces.

So - firstly, any advice would be welcome.

Secondly, does anyone know where we stand legally with their kit that is on our property ? Do we take ownership of the scaffolding, or will the receiver want it ? In theory, I feel like our builder shouldn’t be allowed on the premises (unless he is going to carry on with finishing what he owes us).

Can he force his way in to take back tools etc ?

Could the Receiver claim we owe him money ?

As you may imagine, it is very stressful and has been negatively affecting my health - particularly over the last three months.

We also feel really cheated, as it seems like he was leading up to this (I presume, pulling in cash from clients like ourselves and then removing it prior to the bankruptcy).

Any steering would be a bonus - literally !!!

Thanks…

Edit - if anyone can recommend a builder in the Bath area, do please holler.

Jez6345789

I had a close friend in a similar situation and would say advice from a good lawyer is worth while but think long and hard before filing as my friend ended up suing said builder on lawyers advice but in reality as he had insurance he ended up taking on a big insurance firm and effectively they came seriously lawyered up. Made out the builder to be a life long hard working man who through no fault of his fell on hard times and the judge effectively took pity on his terrible situation my friend got saddled with a load of costs and the project was never finished. It never seemed that way through the legal process but that’s where it end up so eyes wide open in my mind and  look before hoping the law will get you suitable retribution. 

robgilmo

Retribution? If you go lawered up make sure you dont mention retribution, you want a resolve not revenge. The builder has done nothing wrong in the eyes of the law, seeking punishment is a bit harsh.

The tools do not belong to you, you cannot simply 'take ownership' because the job isnt finished. Your best bet is to speak directly to the builder , first get advice from either CAB or spend a few hundred on an hours consultation with a solicitor.

Jetsam1

It does seem though that any Trade or Builder is largely a law unto themselves and get away with anything and everything. The likelyhood of any successful legal action would be zero and in any scenario you are stuck with the costs and if you touch the equipment/tools you get done for theft.

Bankruptcy was probably semi deliberate as a ploy.

Adey

Most of the builders work will probably have been done by subcontractors. Your best bet to get it finished is probably to get in touch with all of them and see what can worked out to pay them yourself. They will prob be needing some work to fill the gap and carrying on on a job they are part way through is poss a good option for them, as long as you pay them.

You will jave to deal with the bankruptcy of the builder as a separate issue, but seems doubtful you'll get anything out of it.

Job will prob cost a bit more than you wanted it to, but that's life....

Unless you are familiar with the building sequence and processes, you will need some help in getting things done in the right order to avoid lots of revisits and reworks. You may be able to employ the old site manager for advice (if he was any good)

Good luck!

drofluf

robgilmo said:

Retribution? If you go lawered up make sure you dont mention retribution, you want a resolve not revenge. The builder has done nothing wrong in the eyes of the law, seeking punishment is a bit harsh.

The tools do not belong to you, you cannot simply 'take ownership' because the job isnt finished. Your best bet is to speak directly to the builder , first get advice from either CAB or spend a few hundred on an hours consultation with a solicitor.

But it could never be a convenient time for them to be collected or could a storage charge be levied?

chickenbonejohn

Did you have a written contract with the builder? The JCT Minor Works contract is what I used on domestic work when I worked as an architect.  If you don't have a written contract, then you are best to take some professional advice.

Scaffolding and possibly any equipment on site such as cement mixers etc will be on hire, and the hire firms will be after their kit back and any hire charges that haven't been made, so there's no leverage or benefit to be had by trying to hold onto them, as you could make yourself liable for the overdue and continuing hire charges. Materials and unfixed goods are a different matter, and will generally deemed to have been paid for by you, but you may have to take measures to ensure that they are not removed from site. 

Presumably you made stage payments - it's normal to hold back some "retention" monies until the works are completed to cover minor problems both before and after completion, and normally your architect/surveyor will ensure that only the true value of the work is paid at any stage, but if you didn't employ anyone to do the stage valuations and authorise payments, you are at the mercy of how honest the builder was. When builders start getting into difficulty they always want to pull as much money out of the jobs they are doing, so there's a risk that they may have overcharged you for the work that's actually been completed. If the builder has filed for insolvency, that doesn't necessarily automatically terminate the contract, but he's at default by not continuing the work as agreed, (ie breaking the terms of the contract), so you may need to actually give notice to him that the contract is terminated. Take advice - you may need both and architect and a lawyer to be fully informed.

fretmeister

Assuming you didn’t buy build insurance?

If not then check your home contents and buildings policy. You might find that there is cover for them paying you unrecovered judgments debts. This means you could sue and if you win and get a judgment / court order in your favour and the builder cannot pay then your own insurer pays the judgment and the costs.

It’s not on every policy but worth a look.

You may also have legal cover on all manner of financial products or memberships (eg National Trust) that provides legal advice on all manner of things. Check them all and start sending emails.

RaymondLin

robgilmo said:

Retribution? If you go lawered up make sure you dont mention retribution, you want a resolve not revenge. The builder has done nothing wrong in the eyes of the law, seeking punishment is a bit harsh.

The tools do not belong to you, you cannot simply 'take ownership' because the job isnt finished. Your best bet is to speak directly to the builder , first get advice from either CAB or spend a few hundred on an hours consultation with a solicitor.

100% ! Not retribution! The first lesson of Tort you learn is that Tort is a Shield, not a Sword. 

boogieman

That sucks, big time. Sorry to hear it and hopefully you get some resolution via insurance (does the builder have his own cover do you know? Can you claim off that? Is he a member of any trade organisation?)

I would hold onto any materials on-site, as you’ll have already paid for them. I would guess the tools and equipment will legally still be the builder’s property, so he’d be entitled to come and claim them back. In fact they might have to be sold to pay off his debts. I don’t know any builder that would own his own scaffolding, so that will be on hire and you’ll need to give access for the scaffold company to reclaim it. 

Please tell us you’ve been paying in instalments and/or have held back a percentage for satisfactory job completion? Hopefully he’s not holding onto a big wedge of your money? Don’t be surprised if he reappears under a different but similar company name by the way, it’s a fairly common trick to get out of paying debt. 

Gassage

Any charge the receiver might try and levy upon you can be offset by you keeping records of what needs making good from work completed and off set against monies owed.

Tools- belong to reciever now, in all probability

Scaffold- almost certainly belongs to hire company. Send them a note asking for immediate removal. Issue is downtaking and who is responsible

dazzajl

I have nothing useful to add but I’m really sorry to hear you have all this stress Jem. I hope it turns out to be not so hard getting back on track. 

axisus

Sorry to hear about that. We had a really nice builder doing our loft conversion a couple of years back. He insisted we only paid him £5k at a time as he got each stage sorted, which I though was pretty good.

A pal of mine had a bastard of a builder. My friend is disabled with a severely disabled daughter, they were getting a purpose built single story building on a plot of land. A builder took ALL their money, then filed as bankrupt and they lost the lot. A few months later and he seemed to be up and trading under a different name.

SPECTRUM001

Thanks all - it is super stressful, however we are trying to be as proactive as possible.

The (very good) decorator is now working directly with us (interestingly, at a third of the cost we were paying) although he won't be around too long. We are currently waiting to hear back from our Builder - as he has said he will put us in touch with some of his trades - whether this happens remains to be seen - it could be a delaying tactic to his advantage.

With regard to the scaffolding, it does actually belong to the builder as he had a scaffold wing to the business. So I guess it now belongs to the official receiver ?

We have got excel and email records of unfinished works that have been paid for, so I would hope if we are named as a party owing money, we can offset accordingly.

With regard to money, we were paying on a realtime basis - so we haven't given him eg £20k upfront now lost, but we will now need to "pay again" to have certain jobs suitably finished. If this adds £10k in costs, hopefully they will be counterbalanced by some savings here and there. I guess we don't know until we make some headway...

The other thing we need is our Buildings Regs, Electrical and Gas Safe certs - which I would imagine he cannot provide as he is not trading anymore.

We will also contact our solicitor (who knows our builder) so she is aware and can offer us any immediate guidance.

Ultimately, I reckon this is now going to add another twelve months onto the project - the main thing is we can keep it afloat. I wonder if the classifieds will soon be my best friend !!!

Gassage

SPECTRUM001 said:

Thanks all - it is super stressful, however we are trying to be as proactive as possible.

The (very good) decorator is now working directly with us (interestingly, at a third of the cost we were paying) although he won't be around too long. We are currently waiting to hear back from our Builder - as he has said he will put us in touch with some of his trades - whether this happens remains to be seen - it could be a delaying tactic to his advantage.

With regard to the scaffolding, it does actually belong to the builder as he had a scaffold wing to the business. So I guess it now belongs to the official receiver ?

We have got excel and email records of unfinished works that have been paid for, so I would hope if we are named as a party owing money, we can offset accordingly.

With regard to money, we were paying on a realtime basis - so we haven't given him eg £20k upfront now lost, but we will now need to "pay again" to have certain jobs suitably finished. If this adds £10k in costs, hopefully they will be counterbalanced by some savings here and there. I guess we don't know until we make some headway...

The other thing we need is our Buildings Regs, Electrical and Gas Safe certs - which I would imagine he cannot provide as he is not trading anymore.

We will also contact our solicitor (who knows our builder) so she is aware and can offer us any immediate guidance.

Ultimately, I reckon this is now going to add another twelve months onto the project - the main thing is we can keep it afloat. I wonder if the classifieds will soon be my best friend !!!

Well, many believe that the whole process is surrounded in legalise- the truth is receivers do deals.

In 1996 the engineering co I was working for went bust owing me £2.5k. The receivers were pretty rude (especially considering they'd done it the day before payday). 

I worked remotely as as such I had all of the only copies of all of the working files notably the ones on Manchester Concert Hall.

The receiver rang me 

"Can we have our files back?"

"Sure - not sure where they are, depends if I can find them as no use to me now- may have binned them- You'll need to pay me to post them etc"

"No probs- how much?"

"Well, it's an imposition and I am not sure I have time to look- how does £2,5k sound?"

"That's blackmail!"

"Is it? Sorry, not my problem."

They paid me.

So- in essence, you might pressure them in similar way.

Dominic

There will not be a Receiver......you mentioned 'his directors' therefore I assume it is a Limited Company and they have filed for a Voluntary Liquidation.
There is a huge difference between a Liquidator ( paid by the company ) and a Receiver (paid by creditors )
I won't waste time going into the various differences and obligations or the process .
Essentially the Liquidator will need to ratify his appointment by majority vote of Creditors at a Creditors meeting -I suspect the main creditor will be HMRC ,Vat, Maybe a few trade suppliers and Subbies .If they are reputable and there is no obvious fraud/criminal behaviour then it's likely that the Liquidators will get HMRC and other creditor approval.
All assets and debt belong to the Liquidator who will ultimately pay debt from any liquidated funds (if any ) to each and all in a pro rata dividend after secured creditors are settled.With small business there is usually no money left after Liquidator and his Agents have taken fees for themselves.
If you have a viable claim lodge now with appointed liquidator ......don't waste your time nitpicking snagging or sums under £20k....will get you nowhere in real life but if you want to be entitled to stay in the picture you need to be a recognised claimant.
Get on and pick up the pieces with individual tradesmen and manage it yourself.
All tooling etc are the property of liquidator .

robgilmo

drofluf said:

robgilmo said:

Retribution? If you go lawered up make sure you dont mention retribution, you want a resolve not revenge. The builder has done nothing wrong in the eyes of the law, seeking punishment is a bit harsh.

The tools do not belong to you, you cannot simply 'take ownership' because the job isnt finished. Your best bet is to speak directly to the builder , first get advice from either CAB or spend a few hundred on an hours consultation with a solicitor.

But it could never be a convenient time for them to be collected or could a storage charge be levied?

I would let it go, you could be walking into a gun fight with a paper aeroplane, have nothing to do with anything you cannot prove to be yours. It could bite you on the arse and most likely would. First course of action is to get pro advice and try and get the work finished , throwing stones at this point wont resolve this.

BillDL

SPECTRUM001 said:

..........
The other thing we need is our Buildings Regs, Electrical and Gas Safe certs - which I would imagine he cannot provide as he is not trading anymore.

It is probable that the electrician(s) and gas installers used by the company are contracted and, given that they have to pay themselves to keep their "codes" up to date, they MAY still be able to sign off on the work they did if you can find them and ask.

robgilmo

BillDL said:

SPECTRUM001 said:

..........
The other thing we need is our Buildings Regs, Electrical and Gas Safe certs - which I would imagine he cannot provide as he is not trading anymore.

It is probable that the electrician(s) and gas installers used by the company are contracted and, given that they have to pay themselves to keep their "codes" up to date, they MAY still be able to sign off on the work they did if you can find them and ask.

Cant a building inspector sign it all off?

Adey

BillDL said:

SPECTRUM001 said:

..........
The other thing we need is our Buildings Regs, Electrical and Gas Safe certs - which I would imagine he cannot provide as he is not trading anymore.

It is probable that the electrician(s) and gas installers used by the company are contracted and, given that they have to pay themselves to keep their "codes" up to date, they MAY still be able to sign off on the work they did if you can find them and ask.

I ask them to finish off any remaining work as well, direct to you. They should easily be able to certify their works then.

Dominic

robgilmo said:

BillDL said:

SPECTRUM001 said:

..........
The other thing we need is our Buildings Regs, Electrical and Gas Safe certs - which I would imagine he cannot provide as he is not trading anymore.

It is probable that the electrician(s) and gas installers used by the company are contracted and, given that they have to pay themselves to keep their "codes" up to date, they MAY still be able to sign off on the work they did if you can find them and ask.

Cant a building inspector sign it all off?

No