When a major builder gets into financial trouble, subcontractors can quickly find themselves exposed for work they have already completed, materials they have supplied and invoices that remain unpaid.
That risk has been highlighted by the voluntary administration of Sydney-based Bathla Group. The major residential developer entered voluntary administration in August 2026 with roughly 2,000 homes under construction. Administrators have since identified about $3.4 billion in known consolidated creditor claims.
Voluntary administration does not automatically mean a business will be liquidated. However, it can immediately change what creditors are able to do to recover money they are owed.
It’s a NSW story, but the problem is just as relevant to Gold Coast subcontractors and suppliers. What is an unpaid invoice actually worth once the builder above you becomes insolvent? Can you take back materials you haven’t been paid for? And what should you do when the first warning signs appear?
What happens to your unpaid invoices?
Once a company enters voluntary administration, the position changes quickly. Under section 440D of the Corporations Act 2001 (Cth), legal proceedings against the company generally can’t be started or continued without the administrator’s written consent or leave of the court.
That can leave a subcontractor who has completed $100,000 of work with a valid $100,000 debt, but no guarantee of recovering $100,000.
One Bathla contractor reportedly found itself in exactly this position, telling the ABC that it was owed close to $400,000 for work, labour and materials and had been preparing legal proceedings shortly before Bathla entered administration.
The problem is particularly acute for unsecured creditors. If you don’t have effective security or another payment protection available, you may need to lodge and substantiate your claim in the external administration. What you ultimately recover will depend on what happens to the company, the assets available and, if a deed of company arrangement is proposed, the terms of that deed.
This is why speaking to debt recovery lawyers or an insolvency lawyer at the first signs of trouble, before a builder formally collapses, can be important. A civil litigation lawyer can also advise on your options if an unpaid construction debt has developed into a dispute.
Unfinished work creates another risk
The unpaid invoice is only part of the problem. What do you do with the work you haven’t finished? Simply walking off site can be risky because your right to suspend work will depend on the contract and applicable legislation.
But continuing to work for a builder that has stopped paying can be equally dangerous because it increases your financial exposure.
Under section 98 of Queensland’s Building Industry Fairness (Security of Payment) Act 2017 (Qld) (BIF Act), a claimant is provided a statutory right to suspend construction work or the supply of related goods and services in certain circumstances. If the amount owed under a payment claim hasn’t been paid in full by the due date, a claimant can give written notice of their intention to suspend under the BIF Act. At least two business days must then pass before work is suspended.
The process needs to be followed correctly, so getting advice before you stop work can help avoid creating another contractual dispute.
Why a retention of title clause may not protect you
Suppliers sometimes assume a retention of title clause means materials remain theirs until the builder pays for them. But the Personal Property Securities regime makes the position more complicated.
A retention of title arrangement generally creates a security interest in the goods supplied. The Australian government’s Personal Property Securities Register (PPSR) warns that if you don’t register that interest, you will be an unsecured creditor if your customer becomes insolvent.
In other words, putting a retention of title clause in your terms and conditions is not enough by itself to protect your priority.
Timing is also key, and it depends on who your customer is and what they do with the goods. Your “customer” here is whoever you contracted with and delivered the goods to, which might be the builder directly or a subcontractor further down the chain if you’re supplying them rather than the head contractor. Retention of title interests will commonly be purchase money security interests (PMSIs), and specific registration timeframes apply depending on what your customer does with the goods once delivered:
- If the goods will form part of your customer’s inventory – for example, materials a building supplier buys from you for resale – you must register before the customer takes possession.
- If the goods are for your customer’s own use – for example, materials a builder takes delivery of for use on a project – you have 15 business days from the date they take possession to register and obtain PMSI super-priority.
Construction materials create an extra complication. The PPSR applies to personal property, but generally not to land, buildings or fixtures. That means the position can change once materials are fixed to the building, so a retention of title clause and PPSR registration may not give you a right to simply remove installed materials.
Missing the relevant deadline can mean losing PMSI super-priority, even though a later registration may still be effective as an ordinary security interest. Separate timing rules also apply when the customer is a company, so registering security interests early is important.
There is another important limitation for tradies: the PPSR protects security interests in personal property. An unpaid invoice for labour or services does not, on its own, give you a security interest that can be protected simply by making a PPSR registration. There must be a valid security interest in personal property.
A commercial lawyer on the Gold Coast can review terms of trade and security arrangements before problems arise rather than trying to fix them after a customer becomes insolvent.
Queensland subcontractors have other payment protections
Queensland subcontractors potentially have several avenues available under the BIF Act.
One is adjudication. A subcontractor who makes an eligible payment claim and isn’t paid in full may be able to apply for adjudication, but strict deadlines apply.
Another option may be a subcontractors’ charge. This can effectively ‘leapfrog’ the contractor that owes you money and freeze money still payable to that contractor by someone higher in the contractual chain.
However, that protection has a crucial limitation: it only works if money is still owing further up the chain. Strict time limits also apply, and you generally can’t use adjudication and a subcontractors’ charge for the same payment dispute.
Queensland also has a project and retention trust account framework designed to protect certain subcontractor payments and retentions. It currently covers eligible Queensland government contracts of $1 million or more and eligible private sector, local government, statutory authority and government-owned corporation contracts of $10 million or more.
The time to act is before the collapse
By the time administrators arrive, some options may already have narrowed. Warning signs can include payments becoming progressively later, unexplained short payments, repeated promises that money is coming, disputes suddenly being raised about previously accepted work or requests to continue supplying despite substantial overdue invoices.
That’s when you should start reviewing your position. A commercial lawyer on the Gold Coast can help:
- Confirm exactly what you’re owed and when each amount became due.
- Keep contracts, variations, payment claims, invoices, emails, delivery records and evidence of completed work.
- Review whether you have a valid right to suspend work.
- Check any existing PPSR registrations and obtain advice about unregistered interests.
- Consider whether adjudication, a subcontractors’ charge or another debt recovery option remains available.
Delay can close off some of those options. A subcontractors’ charge, for example, can’t help if the party higher in the contractual chain has already paid all remaining money to the contractor.
Bathla is a reminder that even very large construction businesses can encounter serious financial problems. For subcontractors and suppliers, the important question is not only whether you have a contract and an unpaid invoice, but what protections are available if the business above you can no longer pay.
If a builder or head contractor owes your Gold Coast construction business money or is showing signs of financial trouble, QBM Lawyers can review your contract, explain your options under Queensland law and help you take steps to protect your position before your exposure increases.
Frequently Asked Questions
You can still claim the money you are owed, but voluntary administration generally restricts legal proceedings against the company. Your prospects of recovery will depend on factors including the type of debt, whether you hold any security and the builder’s financial position.
Potentially. Under Queensland’s BIF Act, a subcontractor may have a statutory right to suspend work after an unpaid payment claim if the required process is followed. Your subcontract may also contain relevant provisions, so it is important to check your position before stopping work.
Depending on the circumstances, options may include pursuing the debt, applying for adjudication under Queensland’s BIF Act or lodging a subcontractors’ charge over money still payable higher up the contractual chain. Strict deadlines can apply, so acting early is important.
A retention of title arrangement generally creates a security interest in supplied goods. Registering that interest on the PPSR can be critical to protecting your priority if your customer becomes insolvent. If the goods will be resold as part of your customer’s stock, register before they take possession. If the goods are for their own use – such as being installed into a build – you generally have 15 business days from possession to register and preserve PMSI priority.
Ideally, before the builder enters administration or liquidation. Persistent late payments, unexplained short payments, growing unpaid invoices or requests to continue working despite overdue debts can be signs that it is time to seek legal advice.
