Insolvency has become an increasingly important issue in the construction industry as a consequence of the recession. A company is deemed to be insolvent when it satisfies one of the two tests under s 123 of the Insolvency Act 1986 (IA86). Section 123(1) of IA86, known as the ‘cash flow’ test, is met if a statutory demand for over £750.00, judgment or court order is unsatisfied or the court comes to the conclusion that the company is ‘unable to pay its debts as they fall due’.
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