Recognize early warning signals: prevent construction insolvency

Recognize early warning signals: prevent construction insolvency

The construction industry in Germany is facing an increasing problem - insolvent property developers and project developers who leave construction projects unfinished. According to the German Economic Institute, 578 companies in the construction industry filed for bankruptcy last year, leading to an increasing number of half-finished construction projects. Builders and property buyers are particularly affected in such cases and ask themselves how they can protect themselves from such risks and which warning signs they should not ignore.

To protect yourself from unfinished construction projects and bankruptcies, it is advisable to carefully examine potential construction partners. Reference buildings, online reviews and recommendations can provide helpful clues. It is also advisable to bring in experienced project supervisors and technical experts to monitor the construction process. Smartly negotiated construction contracts with security agreements, contractual penalties and construction completion insurance can provide additional security.

At the first signs of insolvency in relation to the contracted construction company, it is important to act early. Unreasonable changes to the company headquarters, changes in shareholders and waves of layoffs can be warning signs that developers should pay attention to. Regular visits to the construction site and collaboration with external project supervisors can help to identify and solve problems at an early stage.

If bankruptcy is declared, it is advisable to remain calm and plan the next steps carefully. Communicating with the insolvency administrator and presenting the advantages of fulfilling the contract can help ensure that the construction project continues despite insolvency. Particular caution is required when submitting termination notices, as insolvency-related clauses require legal review.