When a company on your project goes into voluntary administration, the impact is rarely contained or orderly.
Payments may slow or stop altogether, work can become uncertain, and communication often breaks down. In that environment, contractors who take early steps by asking the right questions and properly assessing their position typically achieve better outcomes than those who wait for the process to unfold around them.
Voluntary administration does not necessarily signal the end of the company. In many cases, it is intended to stabilise the business and provide an opportunity to restructure. However, a company entering administration, specifically a head contractor or developer, introduces significant uncertainty that contractors and subcontractors engaged on a project must actively manage.
The First 48 Hours
The first 48 hours are critical because they set the tone for every decision that follows.
Administration moves quickly. Shortly after appointment, the administrator begins assessing the company’s financial position and determining whether it can continue in some form (in truth the administrator often has a preliminary view based on discussions that took place before their appointment).
Creditors’ meetings and formal recommendations follow within a relatively short timeframe, meaning that the direction of the company and the project can shift within weeks.
Within that period, contractors must decide whether to continue performing work for the company in administration, pause and seek further direction, or begin planning an exit.
Each option carries risk, and none can be properly evaluated without reliable information. The administrator becomes the primary source of that information, which is why early engagement is essential.
Approach the first conversation with purpose
The initial discussion with the administrator is a commercial conversation that requires preparation and intent.
Before that call, contractors should first understand their own position i.e. what the contract allows, what payments remain outstanding, what security is held, and what information or deliverables are still required from the insolvent party.
With that understanding, the conversation can move beyond generalities and focus on practical outcomes. The following 10 questions provide a structured way to approach that discussion, but each question is only valuable if it is properly explored and understood.
What exactly is the appointment, and who is in control?
The starting point is to remove any ambiguity about what has occurred.
It is not enough to know that a company has “gone under.” Contractors need to confirm the nature of the appointment, the precise timing, and who now has authority to make decisions. Confusion between administration, liquidation and receivership causes many woes for those involved, many of which are avoidable.
Different forms of external administration produce very different outcomes. In some cases, the company may continue operating under supervision. In others, control may shift in ways that disrupt existing contractual arrangements. Where multiple practitioners are involved, such as a receiver alongside an administrator, the lines of authority can become even more complex.
Is a restructure being pursued, and will a DOCA be proposed?
Voluntary administration exists to create an opportunity for the company to restructure its debts and continue trading. That outcome typically takes the form of a deed of company arrangement (DOCA), which represents a negotiated compromise with creditors.
Understanding whether a DOCA is likely to be proposed provides an early indication of the company’s prospects. If a restructure is realistic, there may be a pathway for the project to continue with minimal disruption. If it is not, then the focus should shift toward managing the consequences of a likely liquidation.
Of course, just because a DOCA is proposed doesn’t mean it will get across the line, or that it represents a plausible path forward. Often administrators don’t know the full details of a proposed DOCA at the early stages of appointment, so it’s important to stay up to date as much as possible with the evolving nature of any proposal that might be made.
What is the timeline for decisions?
Timeframes in administration are short and structured. Creditors’ meetings, reports, and voting deadlines typically occur within weeks.
Contractors need to understand:
- when decisions about the company’s future will be made;
- when further information will become available; and
- how quickly circumstances may change.
This information allows contractors to align their own decision-making processes, such as issuing notices, or securing internal approvals, with the pace of the administration.
Will the company continue trading on the project?
One of the more nuanced aspects of voluntary administration is that the company may continue trading while its future is assessed. However, that continuation is rarely straightforward. The administrator may decide to:
- limit the scope of works;
- prioritise certain aspects of the project; or
- pause works altogether.
For contractors, this creates a gap between expectation and reality. Continuing to perform work without clear direction can lead to increased exposure, particularly if there is no certainty around payment.
It’s also imperative to understand that the continuation of a project or contract does not guarantee you payment, even if it is with the knowledge of the administrators – you MUST lock down the source and confirmation of payment if you continue doing work with a company in administration (see below)
Will the company retain its licence?
In construction, the ability to perform work is not just a commercial issue but a regulatory one. Certain forms of external administration can affect whether a company is permitted to hold a building licence, and without that licence, the project may not be able to lawfully continue depending on the circumstances.
If there is a risk that a critical licence will be lost or suspended, contractors need to begin planning for alternative delivery arrangements immediately.
Are staff being paid, and will key personnel remain?
Even where the administrator intends to continue trading, the success of that plan depends heavily on whether the company retains its workforce.
If employees are not being paid, or if key personnel begin to leave, the project may quickly lose its operational footing. This can lead to delays, increased costs, and a higher risk of defects. Understanding the status of the workforce therefore provides insight into whether the administrator’s plan is realistically achievable.
What is the administrator’s position on payments?
Payment is often the most immediate and pressing concern for contractors, yet it is also one of the areas where assumptions can be most dangerous. The administrator may adopt a cautious approach, preserving cash while assessing the company’s position and prioritising essential expenses.
Contractors should seek clarity about what payments are expected, how outstanding claims will be treated, and how security and retention will be managed.
Importantly, contractors should also seek comfort from the administrators about whether they are “adopting” the contract or not. Administrators are simply agents of the company, and in many cases contractors have continued doing work at the administrators’ request, only to find that they were not getting paid for that work down the track.
What is the expected approach to the contract?
Voluntary administration often prompts a reassessment of existing contractual relationships. The administrator may wish to:
- continue the contract to preserve value;
- renegotiate terms to reflect the company’s position; or
- allow termination and replacement.
Remaining in the contract may provide access to valuable information or allow the project to reach completion. Exiting may limit further exposure but create immediate practical challenges. Understanding the administrator’s intentions helps frame that decision in a more informed way.
What information and documents will be provided?
Information is frequently one of the most valuable, and most overlooked, assets in an insolvency scenario. Critical project materials, such as designs, progress records, and certifications, may sit with the insolvent party.
Without access to that information, continuing or completing the project can become significantly more difficult. Clarifying what information will be made available, and when, allows contractors to plan their next steps with greater confidence.
Who will fund the project moving forward?
Ultimately, the viability of any construction project comes down to funding. Even if the administrator expresses an intention to continue trading, that intention must be supported by a clear and reliable source of payment.
Contractors should not continue work unless they understand:
- where payment will come from;
- whether funds are secured; and
- whether another party may step in.
Without that clarity, continuing to perform work becomes a high-risk decision, regardless of any other assurances.
Turning answers into action
These questions only matter if contractors use the answers to guide their next steps. That means recording what the administrator says, testing it against the contract, and making considered decisions based on that position.
If the project continues, the focus should be on control, managing costs, keeping clear records, and monitoring developments as the administration unfolds. If it does not, contractors should shift just as deliberately, relying on their contractual rights, preserving security, and planning an orderly exit.
