Liquidation
Liquidation winds up a company and triggers home-warranty claims. Subbies are unsecured creditors and typically recover little when a head contractor folds.
Ask Chalkline about this →Liquidation is the terminal wind-up process for a company: a liquidator takes control, sells the assets, and distributes the proceeds to creditors in the statutory order set by Corporations Act 2001 (Cth) s 556, then deregisters the company. Once appointed, trading stops and debt-recovery action is stayed. (Verified: ASIC, asic.gov.au, 2026-06-11.)
There are two routes: creditors’ voluntary liquidation (CVL), where directors resolve to wind up and creditors appoint a liquidator, and court liquidation, where a creditor or ASIC applies to a court for a winding-up order. CVL is far more common in construction.
Creditor priority order under s 556:
- Liquidator’s costs and fees
- Employee wages and superannuation
- Employee leave entitlements and retrenchment pay
- General unsecured creditors (pro-rata on whatever remains)
Subcontractors and suppliers are general unsecured creditors. In construction insolvencies they typically receive cents in the dollar, and often nothing. Security of Payment adjudications, retentions, and project trust accounts reduce exposure but do not guarantee recovery once a head contractor has folded.
Home-warranty trigger. Builder liquidation is an insolvency trigger event that activates the state home-warranty schemes for the owner: NSW HBCF, Vic DBI (from 1 July 2025 under the BPC), Qld QBCC. These schemes protect homeowners for non-completion and major defects; they do not cover commercial debts owed to subbies. See trigger event for claim timeframes. (Verified: ASIC INFO 45; icare HBCF; VMIA DBI; QBCC, 2026-06-11.)
Distinction from insolvency. Insolvency is the state (unable to pay debts when due); liquidation is one formal process that follows. In practice many construction insolvencies run straight to CVL without a prior administration period.
For a subbie: limit exposure per head contractor, protect retentions, and lodge Security of Payment claims before a formal appointment is made.
Also known as: winding up; compulsory winding up (court route).
Category: Business / Risk.
Related
See also
References
- ASIC: Liquidation — a guide for creditors (INFO 45) (verified 2026-06-11)
- icare HBCF: How do I make a claim (verified 2026-06-11)
- VMIA DBI: homeowner information — builder insolvency (verified 2026-06-11)
- QBCC: builder insolvency and financial difficulty (verified 2026-06-11)
Last updated: 2026-06-11. Verified: 2026-06-11. Quarterly review for currency.