Hamilton Locke Partner Mark Schneider features in Lawyers Weekly on the implications of the recent judgment handed down by the NSW Supreme Court in Kennedy Civil Contracting Pty Ltd (Administrators Appointed) v Richard Crookes Construction Pty Ltd.
The NSW Supreme Court decision confirmed that the Security of Payment Act is available to entities in administration and through a holding DOCA. Following this judgment, construction companies that enter administration now have a better chance of recovering their debts and being paid by debtors.
Mark spoke to lawyers Weekly and weighted in on the merits of pay claim disputes and stated,
“The judgement confirms that administrators and creditors of construction companies with payment claims are entitled to use a holding DOCA to pursue outstanding debts for the benefit of creditors as a whole. This could see well-advised DOCA proponents in carefully planned restructures more readily including recoveries from these types of payment claims in DOCA funds in future”.
Mark also noted,
“DOCA proponents and their advisers should consider whether DOCA proposals ought to include recoveries from payment claim disputes. Counterparties of construction companies should engage with administrators to explore compromises early”.
“There remains a lot of hardship in the construction industry with rising costs across the board and we have seen a lot of company failures in the industry in the last 12 months, so debt recovery will remain a priority, but there will almost always be a risk of a ‘domino effect’ when there is a collapse.”
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