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  • Aitchison Reid

The builder you are working for has gone bust!!!

The builder has gone bust affecting your business

You've been working hard, the job's going well, then the builder you are working for goes into liquidation. What can you do now?

You might think there's nothing you can do. But, there are some steps you can take to protect yourself and at least give you a chance of recovering some of the money you are owed.

Step One - Remove your Equipment

If you have any equipment on site, remove it as soon as possible.

It is highly likely the liquidator will take over the site and all of the equipment in the process of securing the builder's assets. You want to make sure your equipment is not seized by the liquidator.

To prevent any confusion about ownership you should also have Personal Property Security registrations over your equipment, however this will need to be done well before any liquidation.

Step Two - Lodge a Proof of Debt

As part of the process of winding up the company, the liquidator will investigate and determine a complete list of all creditors. To make sure you are on this list, you need to complete a Proof of Debt form and lodge it with the liquidator.

You should attach copies of any relevant invoices or other supporting documents to the proof of debt form, as your debt or claim may be rejected if there is insufficient evidence to support it.

Step Three - Issue a Subcontractors' Charge

In Queensland, the Subcontractors' Charges Act 1974, allows you to secure a charge over the money owed to the builder by a payer higher up the payment chain on the job you are working on, like the owner or principal contractor ('owner'). The purpose of the subcontractors' charge to is freeze the money before it is paid to the builder in order to pay the debt owed to you, but first the money must exist and be due to be paid to the builder.

A subcontractors' charge can be an extremely effectively way of securing money owed to you. But the law relating to subcontractors' charges can be tricky, for example:

  • Strict time frames

  • A charge must be lodged with the owner within 3 months of the work being completed. With retention money that time frame is extended to within 3 months of the defects liability period ending. Due to the strict time frames it is best to get in quick to secure your charge.

  • Disputed debts

  • If the debt owed to you or the builder is disputed, the owner or the liquidator can apply to the court to remove your charge and in doing so seek its costs from you. So if there are any issues in dispute, you need to be careful and make sure you are aware of the risks, before lodging a sub­contractors' charge.

Should you want to make a subcontractors' charge you will want to make sure it sticks, so we always recommend talking to a professional first to make sure your time frames are met and that you are taking all the right steps for your particular circumstances.

Contact Us

We provide advice tailored to your business's needs about subcontractors' charges or any other concerns you may have. If you need any further information or help, please call our friendly team at 07 3128 0120 or contact us here.

Aitchison Reid Building and Construction
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