New powers to combat phoenixing in NSW construction

The rise of phoenixing in the building and construction industry in Australia in recent years has proved a significant challenge to regulators. Mismanagement of time or cashflow can quickly propel businesses into insolvency.

Construction insolvencies have spiked post-pandemic – according to the Reserve Bank of Australia construction industry insolvencies currently account for almost 30% of company insolvencies in Australia. This is double the already high pre-pandemic levels.

Phoenixing is the practice of deliberately liquidating a company to avoid its debts and liabilities. The business of that company is then resurrected through a separate entity.

To combat this practice, the NSW Government has introduced the Building Legislation Amendment Bill (Amendment Bill). The Amendment Bill inserts new provisions into the Home Building Act (HBA). The new laws, empower the Secretary to disqualify individuals trading as a partnership, or persons managing or directing a