Written by - James Conomos

Over the past few years, Australia’s construction sector has been facing unprecedented pressure, and by mid-2025, the effects have become painfully clear. Dozens of major construction companies across Queensland and nationally have gone under, leaving behind unfinished projects, unpaid contractors, and thousands of affected workers.

As general economic trends since COVID continue to cause turmoil in the construction industry, the value of surety bonds as a performance and financial backstop has become increasingly apparent. While contractors may encounter difficult conditions in the course of their operations, sureties are not only well-capitalized and capable of weathering the storm but also, depending upon the relevant bond wording, are able to step in proactively when their principals experience financial troubles affecting the performance of the work and payment of the subcontractors.

In a difficult economic climate, commercial landlords may fear that tenant insolvencies mean no one will foot the bill for dilapidations claims at lease expiry – but they are not without recourse.

Summary

It is not uncommon for contractors, in several industry sectors, to contract with a special purpose vehicle (SPV), whose day-to-day management is effectively controlled by a parent company, and the SPV has with little to no assets beyond cash flow provided by its parent. In this article we look at what a claimant could do outside of the traditional insolvency process in circumstances where the SPV goes into a form of external administration such as administration or liquidation and there are no assets available to the external administrators.

Summary

The Hong Kong Government received 37 submissions from the public in July 2024 regarding the Construction Industry Security of Payment Bill (“Bill”) and held discussions with deputations from different stakeholders at a LegCo meeting on 16 July 2024.

Overview

Peabody Trust ("Peabody") issued proceedings against National House Building Council ("NHBC") to recover insured extra project costs incurred following contractor insolvency. NHBC sought to short circuit the litigation via an application for summary judgment and strike-out.

If a building contractor becomes insolvent, but the build is covered by an NHBC Buildmark warranty providing insolvency cover, when does time start to run for the insured to start proceedings against an insurer who fails to pay a claim?

The Technology and Construction Court (TCC) has recently considered this question in the context of an application for summary judgment made by the NHBC, in Peabody Trust v National House-Building Council [2024].

The Technology and Construction Court recently delivered helpful judicial guidance on when an insured’s cause of action under an the NHBC ‘Buildmark Choice’ policy, providing cover for contractor insolvency before practical completion arises.

Construction insolvency is not a new problem. With the continued presence of fixed price contracts, in an industry which has always been troubled with cash flow problems and low profit margins, coupled with persistent cost inflation and labour and materials issues affecting the supply chain, it is no surprise that we continue to see insolvencies. The question is, what can you do to protect yourself from insolvency?