4 When faced with the possible insolvency of a private sector partner on a PFI project, departments should, as was done in this case, consider all options open to them, including the possibility of not intervening and allowing the insolvency to occur. As in this case, departments should be absolutely clear what their position is legally under the contract should the private sector partner actually become insolvent. They should establish what rights they have to terminate the contract and take possession of any related assets, and their consequent liability to the payment of any compensation sum.