What to Do If Your Builder Goes Into Liquidation in NSW

Hearing that your developer or builder is facing voluntary administration, such as the recent collapse of Sydney's Bathla Group (including parent entity Universal Property Group and builder Raj & Jai Construction), is every buyer’s worst nightmare.

With over 15,000 homes in limbo across Western Sydney, affected buyers must move quickly. If your builder goes bust, follow these practical steps immediately to protect your money and your home.

1. Stop Payments Immediately

If you are mid-build, do not pay any further progress payments or release funds to the builder, even if they send an invoice. Paying money after insolvency can jeopardize your insurance coverage under the NSW Home Building Compensation Fund (HBCF).

If you bought off-the-plan, confirm where your deposit is held. Under NSW law, your deposit must sit in an independent real estate or solicitor trust account—it cannot be accessed directly by the developer.

2. Contact the Appointed Administrators

When a major developer enters voluntary administration, external managers take control. For example, restructuring firm Teneo was appointed to oversee the Bathla Group.

Get in touch with the administration team right away to state your position as a customer, buyer, or subcontractor.

Tip: Send an email stating your full name, lot/property address, contact details, and contract type (e.g., house & land, off-the-plan unit, or build contract).

3. Register as an Unsecured Creditor (Proof of Debt)

If the company officially transitions from administration to liquidation, you need to ensure you are registered on the creditors list to claim owed money.

Obtain a Proof of Debt Form: Request a Formal Proof of Debt or Claim form directly from the administrator (e.g., Teneo) or download it from their creditor portal.
Calculate Your Claim: Detail what you are owed. This includes paid deposits, advance payments, or estimated costs to fix incomplete and defective work.
Attach Evidence: Include copies of your signed contract, payment receipts, bank statements, and written communications.
Submit Before the Deadline: Return the form to the administrator before the statutory deadline to ensure you are counted during creditor meetings.

Note: Unsecured creditors are paid after secured lenders (like banks or private credit funds) and employee entitlements. While recovery yields can be small, registering is essential.

4. Trigger Your HBCF Insurance Cover (Under 3 Storeys)

In NSW, residential building contracts worth over $20,000 for single dwellings, townhouses, or low-rise apartments (up to 3 storeys) must carry Home Building Compensation Fund (HBCF) insurance.

If your builder goes insolvent, insolvency acts as a "trigger event" that lets you lodge a claim:

Check Your Policy: Locate your HBCF Certificate of Currency/Insurance. You can check if your home has valid cover using the online SIRA HBC Check tool.
File a Notification of Loss: Head to the icare NSW portal and submit a "Notification of Loss" immediately.
Understand the Caps: HBCF cover typically pays up to $340,000 total. Incomplete work claims are generally capped at 20% of the contract price.
Assessment & Restructuring: icare will assign a loss assessor to inspect the site, scope the remaining work, and approve funds to hire a new licensed builder to complete the home.

5. What Happens for High-Rise Apartments & Private Credit Handovers?

If you bought an off-the-plan apartment in a complex over 3 storeys high, HBCF insurance does not apply under NSW legislation. Instead, recovery depends on how the project is structured:

Private Credit & Restructure Handovers: In massive collapses like Bathla Group, private credit lenders often step in to inject capital or partner with administrators to complete construction. This preserves the value of the asset so properties can settle.
Rescinding the Contract: If the project stalls past the agreed sunset date, review your contract with a qualified property lawyer. You may have statutory rights to rescind the contract and receive a 100% refund of your deposit from the trust account.

Quick Action Checklist

[ ] Stop making any direct payments or progress payments.
[ ] Email the appointed administrator to register your details.
[ ] Gather documents: Contract, payment receipts, HBCF certificate, and site photos.
[ ] Check HBCF validity on the SIRA website.
[ ] Lodge a Notification of Loss with icare if your build is incomplete.
[ ] Consult a specialist construction lawyer before signing or terminating any contract.

Disclaimer: This article provides general informational commentary and practical guidance regarding Australian property insolvency processes. It does not constitute formal legal, financial, or real estate advice. If your developer or builder is facing administration or liquidation, consult a licensed NSW construction lawyer or solicitor immediately to evaluate your specific contract terms.