What Happens If My Builder Goes Bankrupt?

A recent spate of builder bankruptcies has raised concerns that the industry isn’t immune to economic problems. There are many reasons for this, including a shortage of skilled labor, rising material costs, and problems with supply chains. A recent study by the Insolvency Service suggests that 266 new businesses collapsed every month in the last nine months, an increase of 29% on the previous period. Fortunately, there are ways to protect yourself and your dream home during a builder’s bankruptcy.

What Happens If My Builder Goes Bankrupt?

Firstly, you should check your legal position. To do this, use the Companies House website. It is essential to ensure that the company you’re dealing with is a limited tiny home builder – one with the letters Ltd or Plc after its name. Alternatively, you can search the Insolvency Register to find out if the company you’re dealing with is a partnership or sole trader. However, it can take a few weeks for the results to appear.

If you believe your builder may be insolvent, you can file a bankruptcy claim with the Insolvency and Bankruptcy Board of India (IBBI) to get your money back. If your builder fails to complete your project, you can also seek damages for non-execution of the purchase agreement.

However, remember that if the builder goes into liquidation, its primary creditors will have priority over your payments. Therefore, you may not receive enough funds to complete your project.