All projects are unique – distressed construction projects are no exception. What matters most not the diagnosis of the key project risks, but rather the options available to the funder to recover it’s exposure or mitigate lossess. 

The CBR Project Audit / Recovery team specialise in working with funders exposed to distressed projects to provide technical construction project audit services coupled with strategic recovery advice.

Early Warning Signs
Early signs of problems on site, with suppliers and consultants include:

• Failure to pay suppliers
• Delayed and /or reduced valuation certificates
• Progress of works slowing
• Insufficient resources deployed on the project

A trigger event can take many forms and may include issues such as breaching loan covenants, failing to make regular loan repayments or breaching overdraft facilities.

Following such an even the funder could undertake a process of reviewing ‘what has gone wrong’ which will in turn be developed into a plan which is likely include one of the following:

• Take no action and review at a later date;
• Take no action but apply further checks and balances;
• Look to exit the loan immediately by selling out;
• Restructure and work out, or;
• Insolvency and distressed exit

When preparing a plan of action the funder will rely on a number of advisors including valuers, lawyers, accountants and licensed insolvency practitioners.

Davis Langdon provide assistance at any stage problems are identified and project the likely future outcome of issues of projects and varying the frames as well as preferred scenarios.

First Actions on Insolvency
First actions to be taken following insolvency include:

• Secure the site; prevent entry & egress of personnel, plant, equipment materials and records
• Appraisal of ownership of goods and materials
• Prepare record of work wholly or partially completed

Using our proprietary process we can continue to monitor and advise the funder closely as events develop.

Our services include:

• Working with funders in identifying technical construction risks including establishing realistic cost to complete and construction programme parameters
• Providing real options including the introduction of JV funding where applicable
• Providing advice on alternative site development options
• Re-negotiating onerous planning conditions
• Providing Building Surveying services and advice on achieving Building Control as well as NHBC/Premier/Zurich compliance
• Providing Project Management services to complete distressed projects
• Working alongside IP’s in anticipation of a possible insolvency event
• Providing VAT and Tax advice relating to the options available to deal with distressed projects