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Our legal experts will keep you up to date on all relevant and current developments.

A Post-Pandemic Inquiry Into Australia’s Corporate Insolvency System
Wednesday 9 November 2022 / by Julie Pourtarvirdi posted in Commercial Recovery & Insolvency Insolvency Construction Administration Inflation

There is no doubt that the pandemic era has caused an economic downturn - now evident in the surge in business failures, particularly within the construction sector.

With the pandemic support schemes coming to an end, there is an imminent fear that there will be further downfall impacting already struggling businesses, which will in turn see a rise above pre-pandemic insolvency levels.

The surge in the number of business failures has reached a two and a half year high, with the largest increase in administrations over the past 12 months being within the construction industry, as companies respond to supply shortages and inflation of materials amongst other concerns.


How is the ATO impacting insolvencies within the building and construction industries?

In April 2022, the ATO issued 50,000 letters of demand to company directors giving them 21 days to resolve tax liabilities.

Historically, once ATO and major banks start escalating collection activity, it’s not uncommon to see insolvencies rise.

This piece from Holman Webb's Commercial Recovery and Insolvency Group highlights the impact that the ATO's issuance of these letters is likely to have within the building and construction industries.


What impact is inflation having on the building, construction and property industries?

The Australian Financial Review recently reported that total construction sector inflation will hit 9.5 per cent over the year to June 2022, and 6 per cent over the year to December 2022”.

This increased financial pressure in the industry will heavily impact the likelihood of increased insolvency activity.

With the latest ABS statistics confirming that the CPI increased by 2.1% in the last quarter, and that inflation reached 5.1% over the 12 months to March 2022 quarter (the highest since 2001) - those in the building and construction industries have been particularly hard hit.

Higher inflation impacts:

These additional costs have flow on effects to construction activity, some of which may be far reaching.


Strategies to reduce risk with the right contract terms and conditions

As all credit professionals know - credit, cashflow and collections all work together to protect the lifeblood of many businesses.  Without a proper functioning credit team, businesses run the risk of significant impacts on ongoing profitability and viability. 

Unfortunately, risk is an unavoidable part of the credit function. 

With this in mind, this article from Commercial Recovery and Insolvency Partner Chris Hadley and Special Counsel Andrew Tanna highlights how carefully considered credit terms can help to mitigate risk and provide safeguards to your business.

This piece was originally published in the Australian Institute of Credit Management's 2022 Risk Report published 30 May 2022).


The Importance of Medical Records: Foti v Biordi [2021] NSWDC 496

In this case note, Insurance Special Counsel Joanne Vesper takes a look at the recent decision in Foti v Biordi [2021] NSWDC 496, delivered by Her Honour Judge Gibson of the NSW District Court on 16 September 2021.  Holman Webb Lawyers acted for the Defendants.


Context Must be Considered Where There is Ambiguity in an Insurance Policy
Thursday 29 July 2021 / by Stephanie Davis & Heather McIntosh posted in Insurance Property Opal Tower Construction Insurance Insurance Policy Construction Contract

In the Full Federal Court decision of Liberty Mutual Insurance Company Australia Branch trading as Liberty Specialty Markets v Icon Co (NSW) Pty Ltd [2021] FCAFC 126 given on 20 July 2021, the Full Court addressed the construction and scope of thirdparty liability policies in the context of claims made by a building and construction company for losses occurring as a result of the manifestation of serious defects within a building, during the defects liability period.

Key Take Away
  1. The Full Court maintained that in the event of ambiguity in an insurance policy, the context (including the market) in which the parties are operating, as well as the commercial purpose of the policy, must be considered (Icon’s Cross Appeal); and
  2. Similarly, the Full Court considered that the context of Insurance Policies must always be considered in circumstances where the definition of ordinary words are not clear (QBE Appeal).
  3. The Full Court ultimately prefers Policy Interpretation which refers to extrinsic contextual material where Policy terms are not clear.

When Can You be Liable, But Not Liable? Shoveller v Dak-Wal Constructions Pty Ltd (No 2) [2021] NSWSC 352

This case note discusses the 8 April 2021 decision of Shoveller v Dak-Wal Constructions Pty Ltd (No 2) [2021] NSWSC 352, in which a 76-year-old retiree fell from a 3m high walkway while visiting a holiday home in Kilcare NSW.


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