A liquidator says you were paid too early. Check the claim before you pay.

Don’t pay the letter first

A liquidator’s preference letter can land after you have already chased the builder for months. Do not treat it as a bill to pay immediately. ASIC says a liquidator can recover certain payments made before liquidation, but the letter itself does not prove the claim. First, check the dates, amounts and company name against your records. ([asic.gov.au](https://asic.gov.au/regulatory-resources/insolvency/insolvency-for-creditors/liquidation-a-guide-for-creditors/?utm_source=openai))

For a trade business, the wrong response is an instant transfer or a quick apology. A preference claim can sometimes be reduced or defended, so your first task is to slow the process down without ignoring it. File the letter, note the response date and start a clean paper trail beside the invoices, bank statements and job records. ([asic.gov.au](https://asic.gov.au/regulatory-resources/insolvency/insolvency-for-creditors/liquidation-a-guide-for-creditors/?utm_source=openai))

Check the six-month window

Start with timing. ASIC says an unfair preference is generally assessed by looking at payments made within six months before the liquidation is taken to have begun, not just the day the liquidator signed the letter. Depending on the appointment, that start date can be earlier than the formal appointment date. ([asic.gov.au](https://asic.gov.au/regulatory-resources/insolvency/insolvency-for-creditors/liquidation-a-guide-for-creditors/?utm_source=openai))

That date matters because the same payment can be inside or outside the recovery window depending on when liquidation is taken to have begun. If the builder had a long cash squeeze before the collapse, the timeline can be messy. Pull the remittance advices, bank entries and invoices into one chronology so you can see which payments are actually in play. ([asic.gov.au](https://asic.gov.au/regulatory-resources/insolvency/insolvency-for-creditors/liquidation-a-guide-for-creditors/?utm_source=openai))

Source: Official guidance

Ask for the evidence behind it

Next, ask the liquidator for proof. ASIC says you should request the details of the payments said to be preferential, the reasons they say the claim is made and the supporting evidence. Ask for whatever material they rely on to show the builder was insolvent when each payment was made. ([asic.gov.au](https://asic.gov.au/regulatory-resources/insolvency/insolvency-for-creditors/liquidation-a-guide-for-creditors/?utm_source=openai))

That request is practical, not aggressive. Insolvency is usually the pressure point in these claims, so you need more than a vague allegation. In a construction file, that evidence might come from delayed wages, unpaid creditors, bounced payments or repeated requests for extended terms. If the letter is thin, say so in writing and ask for the missing material. ([asic.gov.au](https://asic.gov.au/regulatory-resources/insolvency/insolvency-for-creditors/liquidation-a-guide-for-creditors/?utm_source=openai))

Test the available defences

Then test the defences. ASIC notes that a creditor may have a defence if they acted in good faith, had no reasonable grounds to suspect insolvency and gave valuable consideration. If your supply relationship kept turning over, the Corporations Act also recognises a continuing business relationship, which can change how the payments are analysed. ([asic.gov.au](https://asic.gov.au/regulatory-resources/insolvency/insolvency-for-creditors/liquidation-a-guide-for-creditors/?utm_source=openai))

This is where practical records matter. Keep emails showing ongoing orders, delivery dockets, progress claims and notes about the account staying live rather than being wound down. That does not guarantee a defence, but it may help show the payments were part of ordinary trading, not a special arrangement to favour one creditor over others. ([legislation.gov.au](https://www.legislation.gov.au/C2004A00818/2025-03-17/2025-03-17/text/original/pdf/2?utm_source=openai))

Reply before the deadline

Do not miss the deadline in the letter. Even if you are still gathering evidence, tell the liquidator in writing that you are reviewing the claim and need the documents behind it. ASIC says unresolved matters should be followed by independent legal advice before any repayment. That advice should be based on your own dates and records, not guesswork. ([asic.gov.au](https://asic.gov.au/regulatory-resources/insolvency/insolvency-for-creditors/liquidation-a-guide-for-creditors/?utm_source=openai))

If you want a practical next step today, assemble the letter, payment timeline, invoices, bank statements and any trading correspondence, then get advice before you respond on the money. CRP can help coordinate independent qualified professionals for legal intervention and insolvency support. This article is general information only, not legal advice, and outcomes depend on the facts. ([asic.gov.au](https://asic.gov.au/regulatory-resources/insolvency/insolvency-for-creditors/liquidation-a-guide-for-creditors/?utm_source=openai))