The Building Safety Act 2022: what insolvency and restructuring professionals need to know

The effects of the Building Safety Act 2022 reach well beyond construction and cladding risk issues. By extending limitation periods and allowing routes by which liability can pass between associated companies, the Act gives claimants a greater ability to pursue more claims against more parties. For insolvency and restructuring professionals, building safety exposure is now a group-wide issue.

How far does liability reach?

The Act extends the limitation period for claims under the Defective Premises Act 1972 to 30 years for claims which accrued before 28 June 2022, and to 15 years for later claims. Liability is not confined to cladding on high-rise residential towers: it covers fire risk, structural defects and other building safety issues.

Building liability orders

Under section 130, the High Court may make a building liability order where it is ‘just and equitable’ to do so, making a liability of the original party responsible for the relevant work also the liability of associated companies, on a joint and several basis. This can apply even where the original company is insolvent or has been restructured.

An associated company can be made liable if it has been at any time during the ‘relevant period’ associated with the original company. That period runs from the undertaking of the works giving rise to the liability until the order is made, potentially therefore a period of any number of years. Association under section 131 turns on control, such as the holding of shares or having the power to direct a company’s affairs, and includes companies under common control. Sister companies and corporate entities outside the immediate legal group may therefore be caught.

Remediation contribution orders

Under section 124, the First-tier Tribunal may require landlords, developers and their associates to contribute to remediation costs. The section 121 association test differs from the building liability order test and, according to commentary, may extend to companies sharing a common director. Orders can apply retrospectively, and the ‘just and equitable’ test has so far offered little limitation on such orders.

What the courts are saying

• 381 Southwark Park Road RTM Co Ltd v Click St Andrews Ltd [2024]: the first building liability order took an insolvent development vehicle’s liability to its parent
• Crest Nicholson v Ardmore (2026): the contractor entered administration the day before a £14.93m adjudication award; the court allowed an order on that award before liability was finally determined, and insolvency driven by building safety exposure may strengthen the case
• Triathlon Homes LLP v Stratford Village Development Partnership [2025]: the Court of Appeal upheld an order against a developer’s parent, despite public funding and live contractor litigation
• Edgewater v Grey (2026): the Upper Tribunal upheld joint and several liability of over £13m for 76 associated entities; opaque structures invite adverse inferences.

What insolvency practitioners need to consider

Administration or liquidation of a development vehicle will not ring-fence building safety exposure and may even accelerate claims against solvent associates. On appointment, and throughout the process, officeholders should consider:

• Mapping the group and its connections: identify every company linked by control, together with any common directorships, including historic links during the relevant period. Assume each associate is a potential target
• Investigating the portfolio: review historic residential, mixed-use and commercial projects within the extended limitation windows, known or suspected defects and any physically connected blocks that may enlarge the scope of a claim
• Providing for and disclosing contingent liabilities: consider their effect on valuations, creditor reports, restructuring proposals and lenders’ security. Following Triathlon Homes, public funding or pending contractor litigation is not a reason to defer
• Scrutinising pre-appointment restructuring: transfers that appear to shift assets away from at-risk entities may attract scrutiny and will not stop liability attaching to associates; as Crest Nicholson shows, they may strengthen a claimant’s hand
• Preserving estate claims and recoveries: assess claims against directors who failed to address identifiable exposure and advisers whose failure to identify it caused loss, and consider whether longer limitation periods revive the company’s own claims for defective work
• Keeping transparent records: document intercompany arrangements and decision-making; Edgewater shows that opacity invites adverse inferences.

Failing to spot an exposure does not of itself make an officeholder personally liable. The duty is to investigate properly, provide for or disclose contingent liabilities and preserve claims for creditors; the risk lies in professional criticism or negligence claims where that is not done.

Conclusion

The Act has turned what was once a project-level risk into a potential liability for the wider group and beyond. For insolvency practitioners, building safety should be a core part of the investigation on every appointment touching historic development activity, as it should be for anyone involved in a restructuring, financing or acquisition in the sector.

This note is for general information only and does not constitute legal advice.