Administrators vs Adjudicators: How does an administration impact on debts due under security of payment legislation?

Introduction

Part 5A of the Corporations Act 2001 (Cth) provides that the purpose of an administration is to enable the business, property and affairs of a company to be managed in a manner which maximises the chances of that company continuing to trade or otherwise achieve a better return to creditors and members than immediately winding up that company.

The decision in Modcol v National Building Group [2013] NSWSC 380 is a reminder of the Court's overwhelming preference to recognise that philosophy, regardless of the rights afforded to contractors under the Building and Construction Industry Security of Payment Act 1999 (NSW) (SOP Act).