Trade creditor recovery in construction liquidation
The creditor priority order in liquidation
If a builder enters liquidation while your invoice is unpaid, begin by confirming the legal entity that owes the money. Compare its company name and ACN with your contract, invoices and the appointment notice. Keep confirmed information separate from rumours about the project.
An unsecured creditor holds no security interest in the company’s assets. Employee entitlements have priority over ordinary unsecured claims. The amount available to trade creditors depends on the assets, costs and claims in that liquidation. There is no fixed recovery rate for your invoice.
Secured creditors and the bank's position
Do not assume that every supplier has the same creditor position. Security interests, guarantees and ownership arrangements can affect the questions you need to ask. A personal guarantee does not, by itself, make you a secured creditor.
Provide your contract and any security documents to a qualified adviser. Ask what rights those particular documents may give you and what steps are available. Avoid relying on a general payment queue as a prediction of your own recovery.
Acting before liquidation: the Security of Payment Act
After liquidation begins, unsecured creditors generally need the court’s permission to start or continue legal action against the company. Get advice before issuing proceedings or relying on an earlier recovery strategy.
Construction payment rights and insolvency rules can interact. Do not assume that every payment claim or adjudication option automatically ends at the same point. The procedure, jurisdiction and circumstances need to be checked.
Recognising early warning signs
Repeated late payments, changing explanations and reduced communication are reasons to review an account. They are not, on their own, proof of insolvency. Keep a dated record of what has happened and ask clear questions about outstanding amounts.
If work is continuing, review your cash-flow exposure and get advice about your contract before stopping work or agreeing to new terms. Nominate one person to manage the account so important updates are not lost between site staff and the accounts team.
Strengthening your position on future projects
Before taking on new work, review written payment terms, the customer’s legal identity and the amount of credit you can afford to extend. Keep variation approvals, delivery records and payment history organised as the project progresses.
Ask a qualified adviser whether any security arrangement is appropriate for your business and how it should be documented and registered. Registration does not guarantee repayment. Review the practical cost of protection alongside the exposure created by each project.
Prepare your claim and follow the updates
Gather the contract, invoices, purchase orders, delivery records, approved variations and payment history. Reconcile the balance, including credit notes and disputed amounts. A short summary should explain what was supplied, what was paid and what remains outstanding.
Contact the liquidator and follow the instructions for submitting your claim and supporting documents. Keep copies of everything submitted and record any deadline you are given. Ask for clarification if you are unsure what evidence is required.
Next steps if you are owed money
Set a review date and keep the liquidator’s reports with the account records. Update your cash-flow forecast separately from the amount you hope to recover. Your team still needs a plan for wages and supplier commitments while the outcome remains uncertain.
If you need help reviewing an unpaid construction account, contact CRP and explain the situation. Bring the records together first so the discussion can focus on the facts and an appropriate next step.