QLD Building Company Closed Before Paying What is Owed?

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steve Fitz

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19 May 2018
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A building company refused to pay me $30000.00 for kitchens supplied. I took them to court and was awarded 100% adjudication in my favour plus adjudication fees. It now totalled $37000.00 owed. They have closed the business.

In the 8 weeks between me giving them the invoice and them closing the business, they took in credits of just over $100000.00 and paid themselves $65000.00. As far as I am aware, I am the only person who is owed money.

Is it still going to be hard to retrieve the money or in an enforcement hearing will a judge order them to pay this back under Commercial Law?
 

Rob Legat - SBPL

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It may take a bit of work and time, and nothing is guaranteed. I'd suggest the steps are:

1. Make a creditor's statutory demand against the company (which is assisted by the court order);
2. If they fail to comply, you have the ability to apply to the court for the company to be liquidated; and
3. If the liquidator can see that they've made preferential payments, or traded while insolvent, they can take steps to recoup the money and pay the creditors (i.e. you).
 
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Rod

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... and get the statutory demand to them asap.

The other option if they have some assets is to appoint a receiver. Receivers can sell items and give the money straight to you. Saves some of the expense of using a liquidator and the risk of being an unsecured creditor. Suspect @Rob can give better opinions than me on receivers.
 
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Rob Legat - SBPL

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A statutory demand is a useful first shot in any case, as the failure to comply with one (especially one backed by a court decision) can lead to a presumption that the company is insolvent. That presumption can be devastating to a company that is seeking to continue to trade, and places the directors in a precarious position unless they take careful, immediate action to rectify it.
 
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Rod

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That presumption can be devastating to a company that is seeking to continue to trade

I agree with this comment. The OP however has said the directors have closed the business. If this is the situation, and there are still assets in the business name, then appointing a receiver/manager might be better.

Hard to know which way is better with so few facts. I'm just wary of liquidators using fire sale tactics for their own benefit, not the benefit of the unsecured creditor. The receiver has to (in theory) act in the best interests of the creditor.
 

steve Fitz

Member
19 May 2018
4
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1
It may take a bit of work and time, and nothing is guaranteed. I'd suggest the steps are:

1. Make a creditor's statutory demand against the company (which is assisted by the court order);
2. If they fail to comply, you have the ability to apply to the court for the company to be liquidated; and
3. If the liquidator can see that they've made preferential payments, or traded while insolvent, they can take steps to recoup the money and pay the creditors (i.e. you).[/QUOT
A statutory demand is a useful first shot in any case, as the failure to comply with one (especially one backed by a court decision) can lead to a presumption that the company is insolvent. That presumption can be devastating to a company that is seeking to continue to trade, and places the directors in a precarious position unless they take careful, immediate action to rectify it.
Thank you for this information. Its very much appreciated.
 

steve Fitz

Member
19 May 2018
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I agree with this comment. The OP however has said the directors have closed the business. If this is the situation, and there are still assets in the business name, then appointing a receiver/manager might be better.

Hard to know which way is better with so few facts. I'm just wary of liquidators using fire sale tactics for their own benefit, not the benefit of the unsecured creditor. The receiver has to (in theory) act in the best interests of the creditor.
No assets at all and there really is very few facts to know in this case. It was just two guys who built a house or two. No staff, no vehicles, just paid themselves wages till they finished the house I was involved in and then went their separate ways. I have all the financials and it was just money in from the house owner and money out to trades and their wages. We had a minor disagreement at the end which maybe gave them the justification to take all the money.

The adjudicator didn't agree with them and awarded me 100% in my favour but hey they still have the money. I was happy to see that they had taken it all out at the end in a few lump sums as it showed me that they had just taken my money and given it to themselves and I cant see how they are going to explain this. (Two lump sums of $25000.00 and then a couple more smaller ones. Done after my invoice.)