Preserving security for payment claims when facing insolvency

Building and Construction Industry Security of Payment Act 1999 (NSW) (SOP Act) claims, administrator appointments and Holding DOCAs.

Introduction / Summary

While the SOP regime has been a tool available to the construction industry for some time to provide for the timely collection of debts and ongoing cash flow during construction projects, there was a major difficulty in utilising this regime when dealing with a company near to or experiencing insolvency or requiring restructuring. When a liquidator is appointed, it removes the company's ability to access the regime and renders claims under the SOP Act that had not been commenced or determined as "withdrawn", despite the company's best efforts in taking action for the enforcement and payment for completed work.