External administrators or controllers (like Liquidators, Receivers, Administrators, etc) and arguably Restructuring Practitioners (in relevant circumstances), in Queensland are soon to be prevented from recouping their remuneration or expenses from trade debtors or retentions where they are appointed to head contractors or (potentially) subcontractors with sub-subcontractors.
This is due to the project trust accounts that are set to become mandatory from 1 October 2025, under the Building Industry Fairness (Security of Payment) Act 2017 (Qld) (“BIFSPA“). This date represents the overwhelming majority of project trust accounts that will need to be setup by. A small number are currently already in play.
The practical effect of BIFSPA is that external administrators are barred from receiving their fees or costs in administering these project trust accounts.
The offending provisions in BIFSPA are (amongst others):
a) ss 51C and 51E of BIFSPA, which limit the trustee or its agent from recouping fees/costs;
b) s 58A which creates an executive liability provision for any trustee/agent that breaches these provisions (i.e. potentially includes liquidators); and
c) an external administrator’s normal right to apply for orders from the Court to rectify this issue is limited by ss 56B and 51G.
Many abandoned/disclaimed project trust accounts will otherwise be left for the QBCC to deal with. Given the complex priority systems under Australian insolvency law and the resources required to address these issues, the task may well be overwhelmingly burdensome for the regulator.
Article written by Matthew Hudson (Associate Director) – Brisbane