Due to the current recession in Hong Kong, the construction industry is still plagued with subcontractors in precarious financial positions. Insolvency of a subcontractor can create enormous difficulties for main contractors, whose priority remains to complete the project within the designated time frame, in the most efficient manner possible. Issues of foremost importance for a main contractor include ensuring that a project can continue with as little disruption as possible and recovering any funds due from the subcontractor. The purpose of this report is to briefly sketch out some of the steps that can be taken to protect a main contractor from the ramifications of subcontractor insolvency at the contractual stage, and to highlight the rules in relation to the issue of set-off, which is one of the more frequent issues to arise following subcontractor involvency. As most subcontractors in Hong Kong are corporate entities rather than natural persons—at least in so far as subcontracts for significant works are concerned—this article focuses on corporate insolvency issues rather than those arising from bankruptcy of individuals.