Construction Insolvency: Act Before Cash Stops

If a sister company fails, is my contract with the trading company still safe?

Legally, separate companies are separate. Commercially, shared funders, shared directors, intra-group trading and cross-guarantees mean distress often travels. The July-to-September sequence reported around the Torsion entities is a reminder to watch the group, not only the named party on your order.

Are retentions protected in an insolvency?

Often they are not. Unless retention is held in a genuine trust or escrow arrangement that survives insolvency analysis, cash sitting in the failed company’s account is typically part of the insolvency estate. Assume cash retention is at risk until you have verified the holding arrangement in writing.

Should main contractors demand tougher bonds after headlines like this?

Tighter security without faster payment just moves the stress down the chain. If you remove cash retention or shorten payment cycles, pair that with clear vesting, realistic bonding asks, and monitoring that catches trouble early. Otherwise you shrink the SME pool that still prices your work.

The industry does not need another round of shocked statements after the next administration. Treat a notice of intention in a related company as a site instruction: stop, check the entity, fix the payment route, then keep building. Do that on your live packages this week, while the notices still mean something.