Building up to Bankruptcy
How Insolvency Could Stop Your Construction Firm
If you are a licensed builder in a company that is winding up due to bankruptcy, there are a number consequences set out by the Queensland Building Services Authority (QBSA) which you should be aware of.
When a company can no longer satisfy its debt obligations and must be declared bankrupt, it is insolvent. An insolvent company may go through a winding up period, that is, the orderly wrapping up of affairs and closing down of a business, also known as an event.
When an ‘event’ occurs in a company where you hold the role of director, secretary, or influential person, you may be deemed an “excluded person” pursuant to section 56AC of the Queensland Building Services Authority Act 1991 (Act).
What are the consequences of this occurring?
When one event occurs, you will become an “excluded person” for a period of five years unless you can make appropriate submissions to the QBSA to have you deemed to be a “permitted individual”. This application must be made to the QBSA within 28 days after you receive notice from the QBSA that they intend to deem you an excluded individual.
Where a second or subsequent event occurs you will receive a second or subsequent notice from the QBSA, who has the power to deem you an excluded individual for life. When an individual is excluded for life, this means they can never be a licensee, director, or secretary of a licensee company. Again, the individual only have 28 days to apply to the QBSA to be categorised as a permitted individual.
What should I do first?
Where you receive such an exclusion notice you should immediately contact your professional advisors so that steps can be taken to determine whether you should make an application. Your advisor will properly prepare the application on your behalf; there are a variety of factors which must be considered to comply with the requirements of the legislation and give you the best chance of succeeding in your application.
The QBSA has considered my application and it has been refused, what do I do next?
Where the QBSA decides that it will not categorise a person as a permitted individual, you are at liberty to apply for a review of that decision through the Queensland Civil and Administrative Tribunal (QCAT).
The QCAT member will then conduct a new review of the matter to decide if the QBSA decision should have been to categorise the person as a permitted individual. These are important and complicated applications and once again you should instruct competent lawyers to act on your behalf in the application.
Where can I find help?
At Streten Masons Lawyers we can help if you are currently owed money by a person who you fear may become a bankrupt. We can also assist if you are owed money by a debtor and want to initiate bankruptcy proceeds against them. Contact Jeremy at Jeremy@smslaw.com.au or call on 07 5428 1111 to talk about how we can help your business.
By Jeremy Streten