Bridging and Development Finance: Why Litigation is No Longer a Last Resort

In recent years, the bridging and development finance market has seen rapid growth – but with that has come rising risk, mounting defaults and a marked increase in litigation. At Primas Law, our litigation team is seeing a clear trend: funders are acting faster, litigating earlier and embedding legal strategy deeper into their commercial decision-making.

The State of Play

The latest data paints a clear picture of a market under pressure:

• Default rates in bridging finance rose to 5.9% last year, an increase of 20% from two years prior.
• Recovery delays of 6–12 months are now common, significantly impacting lender liquidity and return on capital.
• Possession claims by lenders increased by 29% between 2022 and 2024.
• 1 in 6 business failures are construction companies, directly impacting development finance portfolios.

Funders are turning to litigation not as a last resort, but as a key part of their risk management toolkit.

Why the Shift Towards Earlier Legal Action?

The economics are straightforward: every month of delay erodes returns. In a market where bridging loans typically run for 12–18 months, a six-month recovery delay can transform a performing asset into a loss-making position once holding costs, interest roll-up and legal fees are factored in.

Smart lenders now recognise that early legal intervention – whether through pre-action correspondence, interim remedies or swift possession proceedings – can actually preserve borrower relationships whilst protecting capital. The goal isn’t always court; it’s creating leverage for resolution before positions become entrenched.

The construction sector’s vulnerability means development finance lenders face not just borrower default risk, but contractor insolvency, supply chain disruption and project abandonment. These complex, multi-party scenarios require legal expertise from day one.

The Cost of Waiting

• Lost recovery value. Property markets move. A site worth £2 million today may be worth considerably less in six months if markets turn or the property deteriorates.
• Mounting liabilities. Interest accrues. Security degrades. Third-party charges can rank ahead of your position.
• Diminished negotiating position. Borrowers who sense hesitation will delay, obfuscate or asset-strip. Early action signals you’re serious – and often brings them to the table faster than another round of emails.
• Reputational risk. In a contained market, word travels fast. Lenders perceived as slow to act become targets for opportunistic borrowers.

What Effective Litigation Strategy Looks Like

The funders achieving the best outcomes:

• Involve lawyers at origination. Security documentation, personal guarantees and enforcement provisions are drafted with litigation in mind.
• Establish clear trigger points. Predetermined thresholds for legal escalation: missed payments, covenant breaches, loss of planning permission.
• Act quickly. From first breach to Letter Before Action should be days. From LBA to issuing proceedings should be weeks. Speed compounds your advantage.
• Use interim remedies strategically. Freezing injunctions, search orders and interim charging orders prevent asset dissipation.
• Understand the full toolkit. Possession proceedings, administration, receivership, winding-up petitions and tracing claims each have their place.

Why Primas Law?

Borrowers can often lead inexperienced lawyers a merry dance – with you picking up the cost. Our skilled litigators fight your corner with real-world and practical experience in this unique and tough arena.

We’ve worked with and are trusted by some of the most prominent bridging and development lenders in the market. Our approach is practical and commercial – we’re not interested in running up fees on unwinnable cases. We focus on outcomes that make commercial sense: recovering capital, preserving relationships where possible, and moving on quickly when they’re not.

Our expertise runs the full mile – from stress testing loan documents through to pursuing defaulting borrowers and right into the final stretch of enforcement. No one scrutinises a contract like a litigator, and we draft with litigation in mind – because an ounce of prevention is worth a pound of cure

Take Action Today

If you’re facing mounting arrears, difficult borrowers or stalled projects, don’t wait for the situation to deteriorate further.

Contact Carl Sebastian, Partner and Head of Finance Litigation at Primas Law, for a straightforward discussion about your position. Carl has worked as a finance litigator for over 10 years and worked in property investment and development before becoming a lawyer – which enhances his understanding of the real-world issues in play.

The question isn’t whether you’ll need litigation expertise in this market – it’s whether you’ll have it in place before you need it.

Get in touch with Carl Sebastian today: 01925 386 838 | carl.sebastian@primaslaw.co.uk