Have you been affected by the Ostwald Brothers Administration?

It has been nearly three weeks since the Ostwald Brothers Group entered into voluntary administration, affecting hundreds of local construction companies, employees and their families.

This is an unfortunate but timely reminder to contractors and suppliers that if a head contractor is going belly up, you need to take swift and serious action to avoid missing out on being paid for the work that you have already done and prevent the loss of your current contract and subsequent projected income stream.

What you need to know

Once a company is in external administration, one of two things typically occurs:

most likely, the head contractor’s component of the project is terminated, the principal appoints either a new head contractor (who can select new subcontractors or suppliers) or it apportions the remainder of the work to current or new subcontractors and suppliers; or
less likely, the administrator endeavours to complete the project under the head contractor’s existing contracts with the principal, subcontractors or suppliers, at least for a short period of time. However, even if the principal doesn’t terminate the contract initially and the administrator takes this option to begin with, it could change at any time, as per scenario one.
Either way, existing subcontractors and suppliers face the significant possibility that they will no longer be engaged on the project, meaning they risk losing their projected income stream.

What you need to do

You should seek legal advice as soon as possible if you have any outstanding payment claims, whether or not you have already submitted the payment claims to the Ostwald Brothers Group, as you could be eligible to ‘jump the queue’ and claim payment from the principal directly in both circumstances, under the process commonly referred to as a ‘subcontractors’ charges claim’.

If you are eligible to jump the queue and if you serve certain required notices in a manner that is fully compliant with the relevant laws, the principal must (in most circumstances) retain the amount owed to you by the contractor and either pay it to you directly or pay it into Court, pending an outcome. This process has strict timeframes and compliance requirements – any delay or a minor mistake could render your entitlement void.

Further, if you believe that you are at risk of losing your contract, you should start negotiating with the appropriate parties to ensure you remain a preferred subcontractor and secure your portion of the work required to facilitate the completion of the project.

How we can assist you

It is absolutely essential that you obtain legal advice to ascertain what rights you have. Any delay in seeking legal advice could mean that you forego rights which you would otherwise be entitled to.

Sharné Lategan, Principal Legal Director of Enterprise Legal has assisted many businesses in similar circumstances to obtain the outstanding amounts due and owing to them and solidify their income stream from the project, at minimum cost to their own business.

Contact us today to book a one hour one-on-one consultation with Sharné Lategan for the fixed-fee price of $330.00 including GST. During the consultation, Sharné will get to understand your business and its position and rights in relation to the Ostwald Brothers’ voluntary administration and provide a preliminary assessment on whether your business qualifies for a subcontractors’ charges claim, as well as informal advice on what steps your company should take next to best protect its interests.

For more information please phone (07) 4646 2621 during business hours.