ISG goes into administration

According to press reports, subsidiaries of main contractor ISG have gone into administration. We understand this affects ISG Construction Limited (CRN: 00450103), ISG Engineering Services Limited (CRN: 10289327), ISG Retail Limited (CRN: 02721627), ISG UK Retail Limited (CRN: 04491779), ISG Jackson Limited (CRN: 00767259) and ISG Central Services Limited (CRN: 02997684). At the time of this article, ISG’s website appears to be down.

Administration is the procedure by which a company that is, or is likely to become, insolvent can be reorganised or have its assets realised for the benefit of creditors. The primary aim of an administration is to rescue the company so that it can continue to trade as a going concern. If this is not possible, a company may go into administration for two other purposes:

• to achieve a better result for the company’s creditors as a whole than would be likely if the company were put into liquidation; or
• to realise the company’s property to make a distribution to the company’s secured or preferential creditors.

One of the consequences of ISG going into administration is that an automatic moratorium will prevent creditors from bringing or pursuing legal proceedings against the company or its assets. It is possible to ask the administrators or the court for permission to bring proceedings against the company, however, a creditor with a monetary claim is unlikely to be granted permission. Some of ISG’s clients may also seek to terminate or withhold payment, which could have a real impact on sub-contracts and sub-consultancy appointments.

As a first step, it is important for sub-consultants and sub-contractors to check:

• the terms of their appointment with ISG;
• whether it is possible to suspend or terminate their services;
• whether it is possible to suspend or terminate any licence of intellectual property – this can be a useful negotiating tool with the administrators; and
• whether ISG’s contract with its employer permits the employer to make direct payments to subcontractors in the event of insolvency.

Details of administrators have not yet been confirmed, but press reports speculate EY will be appointed. We will provide further information in due course.

If you are a client, consultant or a contractor and would like advice on the consequences of ISG’s administration, we have put together a specialist team to assist:

• James Hutchinson – Corporate Partner who can advise on ISG’s administration and potential M&A (ISG’s Chief Executive has indicated there might be the opportunity to buy individual business units).
• Will Buckby – Contracts and Projects Advisory Partner who can advise on the terms of your contracts with ISG.
• Antony Smith – Disputes Partner who can advise on claims related to ISG