By Pierce Bedogni - 3 Aug 2018
On 1 August 2018, Ebert Construction Limited went into
receivership. Ebert's receivership will be interesting to monitor,
primarily due to it being the first major construction company to
enter receivership with the requirement to hold retentions "in
trust" under new amendments to the Construction Contracts Act
2002.
If you are involved with building work in a commercial context,
it is likely that you have been exposed to retentions.
Since 31 March 2017, retentions withheld under all new
non-residential construction contracts must either be held in trust
or a suitable insurance policy or bond must be provided in lieu, to
ensure the availability of those retentions should a company enter
receivership/liquidation. Those retentions must be either in the
form of cash, or in a form that can be readily called upon to pay
for those retentions.
Whilst Ebert's receivers undertake their investigations, it will
be interesting to see whether Ebert have been complying with their
obligations under the Act and retentions are available for
contractors working on their projects.
In any case, it is a timely reminder to confirm that if you are
required to hold retentions under your building contract that you
comply with your obligations under the Act. That includes keeping
proper accounting records of those retentions, ensuring that they
are readily available, and capable of being audited.
If you wish to discuss your obligations in relation to
retentions or any other general construction matters please contact
either Geoff
Hardy or Pierce Bedogni.