Fintech Entrepreneur Plans Historic Lawsuit Against the UK Government
In the construction industry, a significant concern has arisen regarding the treatment of subcontractors in the wake of high-profile collapses. Martha Stewart, founder of London-based ProjectPay, has been at the forefront of this issue, advocating for the rights of subcontractors who have been left bearing the brunt of the failings of others.
Stewart's concerns stem from the abandonment of plans by both governments to adopt US-style laws that would prevent insolvency administrators or secured creditors from seizing subcontractor payments. This decision has left subcontractors vulnerable, and in the cases of the collapse of ISG in the UK in 2024 and Pindan in Western Australia in 2021, it resulted in over £1.1 billion in unpaid debts in the UK and similar amounts in Australia.
Money intended for subcontractors was diverted into insolvency estates instead of being distributed to the supply chain. Stewart claims that funds intended for subcontractors are being used for unrelated things or in some cases, for personal enrichment.
In an effort to address this issue, subcontractors in the UK and Australia are preparing class actions against their governments due to misleading protections that failed to safeguard payments. These actions are being brought with litigation funders and law firms, and court filings are expected by the end of the year.
Iain McIlwee, CEO of the Finishes and Interiors Sector, has added that the proposed actions could expand to cover all subcontractors, not just those on Ministry of Justice or government projects.
Alongside the legal challenge, ProjectPay has developed a FinTech platform that guarantees fast, secure payments to subcontractors without requiring legislative change. The platform is already being used on public projects in the UK, Australia, and the US, and is backed by Innovate UK funding and major banks.
Stewart claims that the current situation is a fundamental failure of the UK and Australian governments. She stated, "Subcontractors were promised protection that did not exist, and PBAs only protect money already in the account."
The collapses occurred despite assurances that Project Bank Accounts (PBAs) would provide protection for subcontractors. Drafted reforms in 2019 were dropped without explanation, despite government reports acknowledging PBAs were inadequate.
As the legal proceedings unfold, the construction industry and subcontractors alike will be watching closely to see if justice is served and the promised protections are finally upheld.
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