In recent times, there have been numerous examples of substantial players in the construction market - some who had been in existence for more than 40 years - going insolvent.

Unpaid claims: act before it’s too late 

In such uncertain commercial times, it will be important for contractors or subcontractors to not become a victim to a collapse ‘up the contractual chain’. It will also be important for owners or principals to understand the operation of the construction claim legislation in Queensland to ensure their projects do not become exposed to a string of insolvencies ‘down the contractual chain’ resulting in risk to the program, quality and increased costs.

If, as a contractor, you delay commencing the process to recover the money owed to you under a construction contract, the sudden liquidation of your client may significantly impact your prospects of recovering some or all of your claim. 

Making the wrong strategic call on the recovery process may mean the difference between your claim against the insolvent party being a secured claim as opposed to a non-secured claim.

The following steps should be taken to ensure you best protect your recovery process against those at risk of insolvency: 

  • Look out for any warning signs of your debtor’s potential financial instability.
  • Assess the commercial relationships between all contractors, sub-contractors and the principal.
  • Choose the most appropriate recovery method - noting that an election between the Building and Construction Industry Payments Act 2004 (Qld) and the  Subcontractors’ Charges Act 1974 (Qld) must be made in certain circumstances (see our previous article here for further detail
  • Don’t delay in seeking advice.