cranes g113321d36 1280

The Fall of the Construction Empire

Ben Johnson ||

For some time now there has been speculation as to the ever-looming collapse of the building and construction industry in Australia. At the start of the COVID-19 Pandemic in 2020, it was contemplated that the builders would simply not be able to trade and there would be a huge surge in insolvency in the building and construction industry. That hasn’t happened as yet, for a number of reasons, but especially because of government payments that helped insulate builders and subcontractors from insolvency.

However, two years on and the financial pressure on participants in the building and construction industry is starting to take its toll. There has been a string of collapses of major stakeholders in the industry, including Privium in late 2021 who left more than 2000 homeowners with unfinished homes and close to $43 million in unsecured creditors and BA Murphy in late 2021 who again owed more than $11 million to more than 500 creditors. The lasted in the string of administrations is Probuild, who just last week was placed into administration by its parent company. Probuild is said to have more than 2300 creditors so far, with more than $14 million alone being owed to its employees. The number of creditors owed money by Probuild was so long that the Court dispensed with the need to contact them by postal mail.

Unlike some of the collapses of other builders, the potential fall of Probuild will likely cause a major shockwave in the building and construction industry within Australia given its size and the number of other industry participants it interacted with. Whether it is owners or developers that are stuck now with incomplete sites and continuing to incur costs arising out of the delay, or the subcontractors of Probuild who are now scrambling to try and recover whatever they are owed. This is definitely a space to watch.

What has caused this situation?
Probuild’s parent company has blamed the tight border restrictions placed that Australia has. However, there is certainly more to consider here than border restrictions. The pressure placed on those involved in the builder and construction industry in Australia also stems from a significant increase in materials and trade costs over the last two years, a failure to collect on monies owed in a timely manner, contract administration failures, lockdowns, greater regulation and scrutiny on building works,

In the current circumstances it is essential that those involved in the industry ensure that they take steps to insulate themselves as best they can. These include:

  1. Ensuring that your contract is carefully negotiated;
  2. Carefully administering contracts and sending out appropriate notices;
  3. Obtaining security where appropriate;
  4. Managing outstanding debts and utilising the Security of Payments Acts where possible;
  5. Lodging proofs of debts early when a creditor goes into administration or liquidation.

The most important thing is to understand your rights and the options available to you, whether you are negotiating a contract or whether you are trying to collect monies owed to you after a project has finished. If you need any assistance with the above or are owed money by Probuild, myself and the team here at Coleman Greig are well placed to assist you. Please do not hesitate to contact us.

Share:

Send an enquiry

Any personal information you provide is collected pursuant to our Privacy Policy.

Categories
Archives
Author

More posts

A guide to intrafamily adoption

Adoption is the process where a parent’s legal rights for their child are transferred to another person. The formal adoption of a stepchild or close relative is known as intrafamily adoption.

Passenger movement and visa data-matching by the ATO

Heading overseas for work or a holiday? Taxation issues, including tax residency, should be on front of mind when departing from or arriving to Australia. Why? Because the Australian Taxation Office (ATO) can follow your footprints and, if you’re not careful, spring unexpected taxes on you.

Is it really necessary for my executor to have so many powers?

People often question why the executor of their estate needs to have so many powers. Simply put – if your executor isn’t given any additional powers by your Will, then they are limited to what is set out in the Trustee Act. One area that this can lead to issues in, is the family home – particularly if beneficiaries aren’t in agreement.

Essential terms of a commercial lease

A commercial lease is a contract that details the rights and obligations of a tenant and landlord. So, what are the necessary terms of a commercial lease?

Responding to data breaches

In the final part of our four-part series on your business’ responsibilities related to cyber attacks and data breaches, Special Counsel John Bennett how businesses should respond to data breaches, including application and requirements of the Notifiable Data Breaches Scheme.

Security of personal information

Part 3 of a four-part series on your business’ responsibilities related to cyber attacks and data breaches where Special Counsel, John Bennett provides an overview of some court decisions and proceedings where ‘security’ of personal information has come into issue.

Parental alienation in Family Law

The concept, Parental Alienation Syndrome, was initially brought about by American psychiatrist Richard Gardner in 1985. The term parental alienation is used to describe a situation where one parent is involved in psychologically manipulating their child to turn against the other parent.

Are you liable for labour hire workers if they are injured?

Many employers (host employers) engage employees of labour hire companies, particularly in the building and construction, hospitality and manufacturing industries. However, what happens when one of these employees gets injured at the host employer’s work site? Who is liable for the injuries?

The risks with cyber attacks and data breaches

Part 1 of a four-part series on your business’ responsibilities related to cyber attacks and data breaches. Cyber attacks and data breaches are the top business risk in Australia according to Aon’s 2023 Global Risk Management Survey.

© 2024 Coleman Greig Lawyers  |  Sitemap  |  Liability limited by a scheme approved under Professional Standards Legislation. ABN 73 125 176 230