Builder liquidation and your invoice: where you stand
What happens to payment when a builder is liquidated
UNPUBLISHED EDITORIAL DRAFT. Source verification and approval are pending. This copy is for review and must not be relied upon as advice.
When a liquidator is appointed, everything stops. The builder can no longer pay you directly. Your invoice doesn't disappear, but the way you receive payment changes completely.
After a company goes into liquidation, unsecured creditors cannot commence or continue legal action against the company, unless the court permits. This means you can no longer pursue the builder through normal court proceedings. Instead, you become part of a formal process controlled by the liquidator.
The liquidator's role in a creditors' voluntary liquidation and a court liquidation is to distribute money from the collection and sale of assets after payment of the costs of the liquidation, including the liquidator's fees (subject to the rights of any secured creditor) , first to priority creditors, including employees, and then to unsecured creditors. You must actively participate in the process or risk your claim being overlooked.
Where you sit in the creditor queue
Most subbies and suppliers become unsecured creditors in a liquidation. The liquidator will only pay unsecured creditors if there are funds left over after payment of the costs of liquidation and payment to secured creditors and employees. Generally, the order in which funds are distributed after payment of liquidation costs and secured creditors is: outstanding employee wages and superannuation; outstanding employee leaves of absence, including annual leave, sick leave (where applicable) and long service leave; employee retrenchment pay; and unsecured creditors.
If there are funds left over after paying the liquidators' costs and priority creditors, including employees, the liquidator will pay unsecured creditors a dividend.
Each category is paid in full before the next category is paid. If there are insufficient funds to pay a category in full, the available funds are paid on a pro rata basis (and the next category or categories will be paid nothing).
Register your claim immediately
Within 10 business days after their appointment as liquidator in a creditors' voluntary liquidation (or 20 business days in a court liquidation), the liquidator must give creditors notice of their appointment and information advising creditors about their right to request information, reports and documents; direct that a meeting of creditors be held; give directions to the liquidator; appoint a reviewing liquidator; or remove and replace the liquidator.
Before any dividend is paid to you for your debt or claim, you will need to give the liquidator information to prove your debt. The liquidator will notify you if funds might be available for payment and will call for formal proof of debt forms to be lodged. The liquidator must give you at least 14 days' notice of the deadline for lodging the proof of debt. Check the liquidator's website or contact details and submit your claim promptly, as these deadlines are firm and cannot usually be extended.
Check whether you have registered security
The Personal Property Securities Register is a public noticeboard of security interests in personal property , these are debts or other obligations that are secured by personal property. Registering your security interest on the PPSR helps protect you and lets others know that you have an interest in property.
If the creditor wants to ensure their security interest over personal property other than land is enforceable and given priority in an insolvency, they should register the security on the PPSR. This will assist in tracing any claim you may have to the personal property of the company, and ensure that you are counted among the secured creditors if the company goes into liquidation. If you did register a security interest and it was properly registered before the builder's troubles began, your position is substantially stronger than an ordinary unsecured creditor.
Source: PPSR: Official register
Explore Security of Payment Act options (state-dependent)
Security of Payment laws are designed to create a regular cash flow for building and construction contractors by mandating progress payments. This framework may give you a clear path to receive payment even after insolvency is announced, but there are strict conditions and the Act does not apply uniformly across all states.
A corporation in liquidation cannot serve a payment claim on a person under this Part or take action under this Part to enforce a payment claim (including by making an application for adjudication of the claim) or an adjudication determination. If a corporation in liquidation has made an adjudication application that is not finally determined immediately before the day on which it commenced to be in liquidation, the application is taken to have been withdrawn on that day. This applies in NSW; equivalent provisions exist in other states' SOPA legislation.
Time is critical here. Windows for payment claims under the Security of Payment Act close quickly. Seek advice urgently if you had an unpaid claim in progress when liquidation was announced.
Source: NSW: Building and Construction Industry Security of Payment Act 1999
Investigate funds higher up the contract chain
In many construction projects, money flows down through multiple layers. If a head contractor owes the builder payment, or a principal owes the head contractor, those funds may still be available higher up the chain.
A liquidator may pursue claims against parties above the builder if those claims are viable. Notify the liquidator if you know that the builder was owed money for work on the project. This information helps the liquidator recover assets for all creditors.
Depending on your contract structure and your state's laws (such as the Contractors Debts Act in NSW), there may be limited circumstances in which you or the liquidator can claim payment from a principal contractor. This is not automatic and depends entirely on your contract structure and your state's laws, but it is worth raising with both the liquidator and a legal adviser.
Why timing matters
The liquidator must give you at least 14 days' notice of the deadline for lodging the proof of debt. Many other options available to you in the days after liquidation is announced close quickly. Claims must be lodged within the liquidator's deadline, payment claim windows under Security of Payment laws have strict time limits, and the longer you wait, the fewer alternatives remain.
Liquidators operate on formal timelines. They do not actively search for opportunities on your behalf. If you hold a potential claim, you need to identify it and present it promptly. The difference between acting within days and waiting weeks can be the difference between being considered in a distribution and being excluded entirely.
What to do next
Contact the appointed liquidator immediately and request their claim form. Obtain their contact details from the ASIC website, which maintains a current register of all liquidations.
Review your contract and any invoices with the builder to determine your exact position and whether you have grounds for a Security of Payment claim in your state. Note that SOPA laws differ across Australia; check whether NSW, Victoria, Queensland, Western Australia or another jurisdiction's law applies to your construction contract.
Consider seeking professional advice to review your options. Corporate recovery specialists and construction lawyers can quickly identify which recovery paths remain available to you and help prioritise your actions.
Practical checklist
1. Day 1: Search ASIC liquidation register (asic.gov.au) to confirm liquidator name, appointment date and contact details.
2. Day 1–3: Telephone or email the liquidator's office. Request: (a) formal proof of debt form; (b) liquidator's statutory report (due within 3 months); (c) estimated timeline for dividend announcement.
3. Day 1–3: Retrieve and prepare: original invoices, delivery dockets, payment terms document, email correspondence confirming work completion, and any payment communication history.
4. Day 1–5: Check NSW Fair Trading PPSR search (ppsr.gov.au) to confirm whether you have an active security registration over any of the builder's assets. If unsure, search by company name and registration date.
5. Day 1–7: Review your original contract with the builder. Identify: (a) contract value; (b) whether construction work is residential or non-residential (affects NSW SOPA payment deadlines); (c) any retention or holdback clauses.
6. Day 3–7: If a payment claim was made under SOPA before liquidation was announced and is not finally determined, prepare brief written summary for liquidator of: payment claim date, adjudicator assigned (if any), amount claimed, and current adjudication status. (Note: claim will automatically withdraw upon liquidation if not finally determined.)
7. Day 7–10: Complete liquidator's proof of debt form (will usually require ACN, claim amount, claim date, description of work, GST treatment) and return by the deadline specified (typically 14 days notice given; submit 2–3 days early).
8. Day 10–14: Search land title or contract for any head contractor or principal contact. If evident, notify liquidator in writing of any upstream funds owed to the builder (helps liquidator pursue recovery actions).
9. Day 14+: Retain copy of proof of debt receipt or liquidator acknowledgement. Do not assume claim is registered unless confirmed.
10. Ongoing: Monitor liquidator's website or contact periodically (monthly) for statutory report, dividend announcement or meeting notices. Attend creditors' meeting if called.
Sources and verification
Scope: Commonwealth (Corporations Act 2001 and liquidation procedure) plus state SOPA laws (NSW Building and Construction Industry Security of Payment Act 1999 and equivalents). Audience: Small contractors, subcontractors and suppliers owed money by a builder in Australian states with SOPA laws (primarily NSW, Victoria, Queensland, Western Australia).
Reader question: What happens to my unpaid builder invoice when a builder enters liquidation, and what immediate steps must I take to preserve my creditor rights?
Draft updated 7 October 2026. Source research recorded 2026-10-07. Publication date: not published. Source currency and claim verification remain pending; this is not an independent legal review.
Liquidation: A guide for creditors
Commonwealth (ASIC) · Entire guide; key sections: 'The purpose of liquidation', 'The liquidator's role', 'Distribution of money', 'Proving your debt'. Access recorded 2026-10-07. Verification pending.
Protecting yourself when you supply goods and services on credit
Commonwealth (ASIC) · Sections: 'Who gets paid first when a company is in liquidation', 'What you should do'. Access recorded 2026-10-07. Verification pending.
Source: Protecting yourself when you supply goods and services on credit
Building and Construction Industry Security of Payment Act 1999 No 46
NSW · Section 32B (Application of Part to a claimant in liquidation), subsections (1) and (2). Access recorded 2026-10-07. Verification pending.
Source: Building and Construction Industry Security of Payment Act 1999 No 46
Personal Property Securities Register
Commonwealth (AFSA) · About section and registration guidance; underlying statute: Personal Property Securities Act 2009 (Cth). Access recorded 2026-10-07. Verification pending.
Changes to Security of Payment laws
NSW (NSW Government / Fair Trading) · Section on 'Companies in liquidation' explaining section 32B effect. Access recorded 2026-10-07. Verification pending.