According to the latest statistics from the Australian Securities and Investments Commission (ASIC), the construction industry has faced sustained and accelerating financial distress over the past four years. Since FY 2021-2022, the number of insolvency appointments has almost tripled, with nearly 4,900 cases in FY 2024-2025 alone. And, the 744 cases already recorded for FY 2025-2026 indicate the construction industry continues to suffer severe financial distress.

In Otway (liquidator), in the matter of AMD Freight Pty Ltd (in liq) (No 2) [2025] FCA 1169 the Federal Court of Australia considered an application for termination of a winding up under the Corporations Act brought by the liquidators of AMD Freight Pty Limited (In Liquidation) (Compan

In a recent decision, In the matter of Toys “R” Us ANZ Limited (subject to deed of company arrangement) [2025] FCA 1135, the Federal Court provided important clarification as to its discretionary power to permit the administrator of a deed of company arrangement to transfer share in the company. 

Inthe matter of Trinco (NSW) Pty Ltd (in liq) [2025] NSWSC 993, the New South Wales Supreme Court found Mr Azizi to be a de facto director of Trinco (NSW) Pty Ltd (in liq) (Trinco) and liable for insolvent trading. Trinco’s liquidator was awarded compensation, payable by Mr Azizi.

The High Court of Australia (being Australia’s highest court) refused special leave to appeal the Full Federal Court’s decision inCEG Direct Securities Pty Ltd v Cooper (as liquidator)[2025] FCAFC 47. The Court held that the Full Court’s decision turned on the application of the relevant provision to the particular facts of that case and did not raise any broader question of principle.

Introduction

Introduction

In this first instalment of our insights series on construction insolvency, Ironbridge Legal outlines key red flags to look for and practical steps to manage counterparty risk.

An Industry at Risk - With Contagion Potential

Introduction

In December 2024, Australian Securities and Investments Commission (ASIC) released an updated version of Regulatory Guide RG 217. The guidance is designed to assist directors in complying with their duty to prevent insolvent trading. It sets out four key principles for directors to avoid insolvent trading, explains the safe harbour defence (which offers protection from personal liability), and clarifies ASIC’s approach to assessing breaches of duty and the application of the safe harbour defence.

The Eighth Circuit held that “avoidance actions [e.g., preferences, fraudulent transfers] can be sold as property of the [Chapter 7 debtor’s] estate.” In re Simply Essentials, LLC, 2023 WL 5341506, *1 (8th Cir. Aug. 21, 2023). On a direct appeal from the bankruptcy court, the court affirmed the bankruptcy court’s granting of the trustee’s motions to compromise and sell property under Bankruptcy Code §363(f). A creditor had objected, arguing unsuccessfully that “avoidance actions… are not part of the bankruptcy estate ….” Id.

On July 28, 2023, Judge Michael Kaplan of the Bankruptcy Court for the District of New Jersey issued an opinion granting motions to dismiss LTL Management LLC’s second chapter 11 case, finding that it was filed in bad faith due to a lack of imminent and immediate financial distress. See In re LTL Mgmt., LLC, No. 23-12825 (MBK), 2023 WL 4851759 (Bankr. D.N.J. July 28, 2023). Judge Kaplan’s decision follows the U.S. Court of Appeals for the Third Circuit’s dismissal of LTL’s first chapter 11 bankruptcy case in January 2023.