When a builder goes into administration, subcontractors are last in line
When a builder goes into administration, subcontractors are usually unsecured creditors, paid after secured lenders, the administrator and employees, and often get little or nothing. Protection only works before the collapse: keep claims current, adjudicate early, suspend for non-payment and take security where you can.
Chapter 9: When they go under, you are last in the queue
Construction is the biggest single cause of company failure in Australia. In the year to June 2026, 3,472 construction companies entered external administration, out of 14,152 across the country. The regulator's analysis of small and medium company insolvencies found 96 per cent of creditors got between nothing and 11 cents in the dollar. Subbies sit at the bottom of that queue as unsecured creditors, because you did the work on a promise, and your retention is usually in the same pot unless a statute put it in trust.
When Probuild went into administration in February 2022, around $5 billion of projects were underway and more than 2,300 creditors came forward. The sites were busy right up to the end. The warning was in the paperwork: payment terms stretching, more queries on claims, a commercial team slower to call back. The chapter lists the signs in the order they usually show up, two to four months before the administrator walks in, including defaults, tax debts and adjudications on the public record.
Everything that protects you has to happen before the collapse. Keep claims current, adjudicate the first late payment, suspend lawfully rather than keep working for free, register your goods on the PPSR, and check whether you've contracted with a project company that needs a parent guarantee. Read the same list backwards and it explains why so many subbies fail too.
- 1In the year to June 2026, 3,472 construction companies entered external administration, the most of any industry.
- 296 per cent of creditors in small and medium company insolvencies received between nothing and 11 cents in the dollar.
- 3On a $500,000 package, two unpaid claims and full retention is about $110,000 exposed when a builder fails in month eight.
- 4An adjudication in month two of a builder's decline gets paid; one in month six gets a certificate to frame.
For every builder you work for, write down when they last paid you, when they should have, and the total owed including retention. Look each one up on the adjudication registry and run a credit check. Any that have stretched by more than two weeks in the last quarter get the escalation ladder this month.
Common questions
What happens to subcontractors when a builder goes into administration?
Subcontractors are generally unsecured creditors, so they rank behind secured lenders, the administrator's costs and employee entitlements, and recoveries are often small. Retention is usually part of the same pool unless a statute required it to be held in trust. Contact the administrator early and get advice about any security or trust rights you hold.
What are the warning signs a builder is in financial trouble?
Common signs include payment times stretching, more queries on claims, more deductions, stalled variations, a slow commercial team, other trades going unpaid, and public record changes such as payment defaults, adjudication determinations, director changes or winding-up applications. Most are visible months before a collapse if you're watching the paperwork rather than the site.
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A summary of chapter 9 of Screwed Down by Mat Kennedy. Index figures are as they stood when the book was written (Sept 2026); the live numbers are on the Index. Amazon ranking as seen in September 2026. General information, not legal advice.