What happens when a Queensland builder or developer collapses?
ASIC data shows 569 of the 2,706 Queensland companies entering external administration in 2025–26 were in construction, about 21%. Nationally, construction made up 24.5% of appointments.
The builder may enter voluntary administration, liquidation or receivership. Unpaid subcontractors and suppliers are unsecured creditors unless they hold trust money, a charge or security.
Licensing consequences follow under the Queensland Building and Construction Commission Act 1991 (Qld). A director, secretary or influential person of a construction company when it fails, or in the two years before, becomes an excluded individual. Their licence is cancelled for three years, and a second event makes the exclusion permanent. A person who left earlier can avoid exclusion by showing the company was solvent when they left. Licensed contractors must also meet the QBCC’s minimum financial requirements.
Can subcontractors still get paid?
Payment claims and adjudication. The Building Industry Fairness (Security of Payment) Act 2017 (Qld) (BIF Act) lets a claimant give a payment claim (s 68). It must generally be given within six months after the work was last carried out (s 75). The respondent must give a payment schedule within 15 business days (s 76). If it does not, it is liable for the full claimed amount (s 77). Adjudication applications must be made within 20 or 30 business days, depending on the ground (s 79).
Insolvency complicates this. In Façade Treatment Engineering v Brookfield Multiplex [2016] VSCA 247, Victoria’s Court of Appeal held that a company in liquidation could not use Victoria’s Act. Insolvency set-off under s 553C also overrode its summary judgment provisions. The NSW Court of Appeal disagreed in Seymour Whyte Constructions v Ostwald Bros [2019] NSWCA 11: a claimant in liquidation could use the NSW Act. The respondent could still raise s 553C or seek a stay. NSW then barred companies in liquidation from serving payment claims or applying for adjudication (s 32B, from 21 October 2019).
The BIF Act has no equivalent bar, and no Queensland appellate court has chosen between the two approaches. The Supreme Court will stay enforcement of an adjudicated amount where repayment is at very high risk: Taringa Property Group v Kenik [2024] QSC 327. Once the claimant is in liquidation, s 553C and the proof of debt process usually take over. An unpaid adjudicated amount can also support a payment withholding request to a higher party (s 97B).
Subcontractors’ charges. Under Chapter 4, a subcontractor gives a certified notice of claim to the party that owes money to the builder (s 122). That party must retain enough money to meet the claim (s 126). If the work is complete, notice must be given within three months after practical completion. Proceedings must start within one month after notice (s 136). The charge does not reach money already held in a project or retention trust (s 117). Chapter 4 does not apply to domestic building work on a detached dwelling for an individual (s 103).
Project and retention trusts. A project trust is required for eligible head contracts of $1 million or more with the State or a hospital and health service. For other parties the threshold is $10 million (ss 12, 14). The planned extension to $3 million and then $1 million private contracts was paused on 31 January 2025, and remains paused.
Where a project trust applies, cash retentions under the head contract or a first-tier subcontract must be held in a retention trust (s 32). Trust money may be withdrawn only for limited purposes, and misuse is an offence punishable by imprisonment (s 20A). Liquidators who take over the trusts cannot pay their own remuneration from trust money while subcontractors still have interests in it.
A worked example. A mechanical subcontractor is owed $480,000 on a $6 million private project when the head contractor enters administration. No project trust applies below $10 million. Adjudication against the insolvent head contractor would probably be stayed. Instead, the subcontractor gives a notice of claim of charge to the developer, which still owes the head contractor $900,000. The developer must retain enough to cover the claim, and proceedings start within one month.
What can suppliers, principals and head contractors do?
Suppliers. Retention of title is a security interest that must be registered on the PPSR to survive a liquidation. Goods built into the structure become fixtures, and the Personal Property Securities Act 2009 (Cth) does not apply to them (s 8(1)(j)). See PPSR and retention of title.
Principals and head contractors. Insolvency termination clauses are stayed while the builder is in administration (s 451E), for contracts made from 1 July 2018. There is no stay in liquidation. Set-off, netting and step-in rights are excluded from the stay by the Corporations (Stay on Enforcing Certain Rights) Declaration 2018. Rights based on other defaults, such as failing to proceed, also remain. A former exclusion for projects worth $1 billion or more applied only to contracts made before 1 July 2023. Whether security can be called turns on the clause. Completion costs may be set off under s 553C.
Unfair preferences. Payments in the six months before the relation-back day can be recovered as unfair preferences (s 588FA). Defences include good faith and the running account rule.
Guarantees. Director guarantees survive the company’s collapse. See personal guarantees.
What protection do homeowners have?
The QBCC Home Warranty Scheme covers residential construction work valued at more than $3,300 by a licensed contractor. Non-completion cover applies to fixed-price contracts validly terminated for the contractor’s default. Termination is not needed if the contractor is insolvent and has had its licence cancelled.
Standard cover is up to $200,000 per category of loss, or $300,000 with optional cover. A non-completion claim must be lodged within three months after the contract ends. Structural defects are covered for six years and six months.
What changed in 2025 and 2026?
The trust account rollout was paused on 31 January 2025, and the proclamations for the 2025 phases were repealed. In October 2025, the Queensland Productivity Commission recommended removing the trust framework unless its benefits could be shown to outweigh its costs. In January 2026 the Queensland Government noted that recommendation and kept the framework, committing to reduce the burden on trustees. It also agreed in principle to evaluate the minimum financial requirements. A further reform tranche under consultation covers Home Warranty Scheme thresholds and trust account administration. No bill changing the BIF Act’s payment or charge provisions had been introduced as at 5 October 2026.
What should you do if a builder or developer fails?
- Confirm the appointment type and appointee from ASIC.
- Check whether a project trust or retention trust applies, and notify the appointee.
- Diarise BIF Act, charge and home warranty deadlines immediately.
- Stop supply and secure unincorporated goods, but do not trespass.
- Review termination, security and step-in clauses before acting.
- Lodge a proof of debt, and take advice before returning preference payments.
How Taylor David can help
We act across Australia for subcontractors, suppliers, head contractors, developers, financiers and insolvency practitioners. We can:
- pursue adjudication, subcontractors’ charges and trust claims
- advise principals on termination, security calls and completion
- defend unfair preference claims and statutory demands
- recover debts and enforce guarantees through debt recovery.
This work sits within our insolvency and litigation practices.