Builder collapses

Builder collapses (liquidation or administration) are putting subcontractors at substantial risk not only in relation to money that is owed, but money that they have already been paid.

Justin Mathews of QBM Lawyers provides expert advice in relation to building matters. He is an accredited specialist in commercial litigation and a registered adjudicator under Queensland’s Building Industry Fairness legislation.

Prompt action by subcontractors in the event of builder collapses can make the difference between recovering or going unpaid, particularly where a subcontractor’s charge might be available.

Further, irregular payment by a builder can put a subcontractor at risk of payments received being clawed back as preferences, with the subcontractor not only losing out for unpaid work, but possibly having to pay back money received in the 6 month period before liquidation.

In these times of financial pressure on builders, it is important for contractors to take care that their support of a builder with cash flow issues does not put them in the firing line for preference actions months or years later – as an example in the case of the Cullen Constructions builder collapse, more than 10 subcontractors were sued for amounts that had been paid in the 6 month period prior to liquidators being appointed, which in aggregate exceeded $2M.

As a result, in the situation of builder collapses getting paid does not necessarily mean that troubles are over, if there is reason to believe that the builder is struggling financially.

For advice in relation to preference claims, building contracts recovery options including subcontractor charges, contact our Partner Justin Mathews at justinm@qbmlaw.com.au or 5574 0111.