Construction payment claims and winding-up petitions: lessons from Amber v Ilyrian

What happened?

Ilyrian had undertaken subcontract works for Amber at the Alton Estate in 2019 and Mander Court in 2021. In November 2025 Ilyrian served statutory demands concerning both projects. By the hearing it relied on £27,119.90 for Alton and £39,329 for Mander Court, without the interest originally claimed.

Amber applied under rule 7.24 of the Insolvency (England and Wales) Rules 2016 for injunctions preventing Ilyrian from presenting winding-up petitions. The court examined each debt and Amber's claimed losses, including delay-related charges on the Alton project.

Alton: contractual payment-application requirements mattered

Alton's subcontract expressly made a compliant payment application a condition precedent to payment. Clause 6.4 required particular identifying information, including an order number, job title, site address, description of the work and build-up of the amount sought.

The documents did not meet those requirements. The judge considered the omissions commercially significant because they prevented the contractor from reliably connecting the claim to the relevant order and verifying it.

Accordingly, the £27,119.90 did not become payable under the contractual payment mechanism. That conclusion depended on the wording and purpose of this subcontract. It does not mean every minor error invalidates every application.

Limitation: the interim claim could not be revived

The court also considered limitation as an alternative ground, assuming for that purpose that Alton's application had been valid. On Ilyrian's own evidence, the final date for payment was no later than 11 March 2020. The judge concluded that the particular claim on that interim payment application would have become statute-barred after 11 March 2026 at the latest.

Serving a statutory demand in 2025 did not stop the limitation period running. Nor did the final-payment provisions relied upon revive or postpone the separate interim-payment cause of action.

This finding must not be read as deciding that every conceivable final-account or other contractual claim had expired. Limitation depends on the cause of action and the contractual and factual circumstances.

Alton: a genuine and serious cross-claim

Amber had complained contemporaneously about delay, inadequate resourcing and defective performance. Its notices and supporting documents dated back to 2019 and 2020. The judge considered its Alton cross-claim genuine and serious, notwithstanding gaps in the later evidence of precise costs. That was a further reason why presenting a winding-up petition on the Alton demand would be inappropriate.

The judge was not conducting a trial of the underlying claim. Whether Amber would ultimately recover damages remained for appropriate proceedings.

Mander Court: the debt was due, but the petition was still restrained

Mander Court produced a different result on the debt itself. The court rejected Amber's alleged deductions as insufficiently supported. The whole £39,329 debt claimed in the Mander Court statutory demand was due and owing; it was not disputed on genuine and substantial grounds.

Nevertheless, Amber's genuine and serious Alton cross-claim was assessed on the evidence at £47,728.01 net, exceeding the Mander debt by £8,399.01. The judge held that the cross-claim did not need to arise under the same construction contract: these were the same parties acting in the same capacities. The court therefore granted a final injunction against a winding-up petition on the Mander demand as well.

Why does this matter for construction businesses?

Main contractors and subcontractors often have outstanding accounts on several projects. This judgment shows why it can be unsafe to treat an undisputed invoice on one project as the complete answer when a substantial cross-claim exists on another.

It also shows the difference between ordinary debt recovery and insolvency proceedings. Insolvency procedures are not designed to resolve disputed valuation, delay or defects cases. Equally, a vague or unsupported deduction may not establish a dispute of substance.

What should contractors and subcontractors do now?

1. Follow the payment-application clause. Include every mandatory item and retain proof of service.
2. Keep project accounts identifiable. Record the order, valuation, due date, notices, certificates and relevant emails.
3. Diary limitation early. A demand or negotiation will not, by itself, protect a claim from expiry.
4. Document cross-claims when they arise. Preserve contemporary defect notices, programmes, site records, cost records and correspondence.
5. Review the whole trading relationship. Before threatening a petition, identify credible cross-claims between the same parties, including those from other projects.
6. Choose the right recovery route. An adjudication, contractual claim or other court proceeding may be more appropriate than insolvency pressure.

What the judgment does not decide

The court was deciding whether petitions could be presented, not finally assessing every item of delay or remedial loss. The availability and amount of any cross-claim in another case will depend on its evidence and circumstances; a bare allegation is not enough.