What does it generally mean when a construction company goes into liquidation?
In Australia, when a company enters into official liquidation proceedings, it must immediately cease all operations and be controlled by a designated liquidator who manages its assets and liabilities, and sells assets to repay debts. If it’s a construction company that goes into liquidation, any contracts signed by the company will be considered unenforceable. This also means that the owner has no right to demand that the construction company completes the building project, and the project may come to a halt.
As a property owner, what can you do to minimise your losses in the event of a builder’s liquidation?
This depends on the specifics of the contract, but in general, a property owner can make a claim through the following ways:
- register as an unsecured creditor with the liquidator of the builder;
- make a claim with the builder’s insurance company;
- seek legal advice to review the contract and determine whether payments should have been held in trust or have already been paid to the developer. If the payments were held in trust, they can be recovered; and
- engage a lawyer to negotiate with the liquidator to continue the construction.
In individual cases, property owners can also seek compensation by taking legal action against the builder after obtaining permission from the Supreme Court. However, permission from the court is only granted in exceptional circumstances.
If you want to seek a resolution as soon as possible, we strongly recommend that you seek legal advice. Our commercial litigation lawyers are more than happy to answer any legal questions you have regarding debt and provide you with professional and efficient legal options to protect your debt rights.
Disclaimer: The above information is provided for general legal knowledge and should not be taken as specific advice for your individual situation. The law is complex, and we strongly recommend that you seek professional legal advice. Canaan Lawyers will not be responsible for any loss or damage caused by the information contained or omitted in the above content.