What happens when a business collapses?

The news over the last few days of the Rork group of companies collapsing is a startling reminder of the reality of the current Australian economic climate.

Rork Group had 63 construction projects spread across QLD, NSW, ACT and VIC at the time of its collapse.

Administrators for the company have reported that the company owes debts of nearly $30 million. Of this, over half is owed to unsecured creditors including subcontractors, trade suppliers and such. Many of these subcontractors and trade suppliers will have assets such as tools and supplies on Rork sites and have unpaid invoices.

So, what will likely happen to these assets and invoices?

Administrators will shut down operations and try to recover as much money as possible to repay creditors.

Secured creditors get preference for repayment and unless assets on site are in the PPS register as belonging to another party, they may well be sold to recover funds for the business.

Administrators will look to sell parts of the business and or projects as going concerns, but these are likely to be something of a fire sale. The result will be a significant shortfall in cash to pay debts and could take months to complete.

Unsecured creditors will probably only receive cents on the dollar if anything at all.

There are ways to protect your cashflow and assets, we can help.

Subcontractor agreements – Let us help draft your subcontractor agreement that puts you in the best position to protect yourself in the event of a collapse. These can vary by industry, state, and project. Our business support specialists are ready to help.
PPS Registrations – We can register your assets so that in the event of a liquidation or administration, ownership is legally bound to you.
Don’t let unpaid invoices build up – If you are in the habit of ensuring your invoices are paid in a timely matter, you are at less risk in the event of a collapse. Again, our business support specialists can help you structure the appropriate debt management policies, and we can help collect overdue debts.

Want to know more?

If you would like to talk to us about how we can help you with your debt recovery we are more than happy to help.

Call your local Business Support Specialist, fill in your details below or contact Customer Service at 1300 361 070.

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