How does External Administration affect a Builder’s License in NSW?

Not only is this misconception incorrect, unfortunately it can also often result in poor outcomes, with company directors failing to seek help until it’s too late, and liquidation left as the only practical option.

For builders, the risk of not addressing legal or financial issues until it is too late can be devastating. Once external administration is underway, options to protect a company, its directors, and their contractor licences narrow significantly. Delays in seeking advice can mean that what might have been resolved through administration instead ends in liquidation—with serious long-term consequences for the ability of the individuals involved to continue working in the industry.

In this article, we set out the effects of the different external administration processes on contractor licenses in New South Wales.

How Does Liquidation Affect a Builder Licence in New South Wales?

Fair Trading NSW must cancel a contractor licence held by a company pursuant to Section 22(1)(d) of the Home Building Act 1989 (NSW) (Act) if a company has either:

1. become the subject of a winding up order under the Corporations Act 2001 (Cth); or,
2. has been voluntarily wound up,

Further, upon the cancellation of the company’s contractor license, Fair Trading is also required to cancel a contractor license or supervisor’s certificate held by a director of the company pursuant to Section 22(1)(h) of the Act.

A director of the company may also face significant difficulty in obtaining a new contractor license or supervisor’s certificate; there is no guarantee that a new license or certificate will be issued.

How Does Voluntary Administration Affect a Builder Licence?

If an administrator is appointed to a company, pursuant to section 22B of the Act and regulation 23(1) of the Home Building Regulation 2014 (NSW) (Regulation) the company’s contractor license is not required to be cancelled. The license may, however, be suspended if Fair Trading NSW is of the opinion that there is a risk to the public that the licensee will be unable to complete building contracts. The holder of the contractor licence must provide any documentation or information that Fair Trading requires in order to be satisfied that there is no such risk to the public.

Fair Trading retains the discretion to cancel a contractor license pursuant to section 22(2) of the Act, (although in practice this appears more likely to be exercised where the administration process results in the execution of a deed of company arrangement).

What Happens to a Director’s Individual Builder Licence During Administration?

Where an administrator is appointed, Fair Trading is not required to cancel a company director’s contractor license or supervisor’s certificate pursuant to regulation 23(2) of the Regulation.

How Does Small Business Restructuring Affect a Builder Licence?

If a small business restructuring practitioner is appointed, pursuant to section 22(1)(h) and section 33B(1)(a)(xv) of the Act, Fair Trading NSW must cancel a contractor licence held by a company.

Upon the cancellation of the company’s contractor license, Fair Trading is also required to cancel a contractor license or supervisor’s certificate held by a director of the company pursuant to Section 22(1)(h) of the Act.

How Our Building and Construction Lawyers Can Help

We assist builders and construction companies by providing early, practical advice on managing legal and financial issues, and their impact on contractor licences. Our Specialist Building and Construction Lawyers can advise on the licensing consequences of liquidation, administration, and restructuring, and help directors understand the steps available to preserve both the business and their ability to continue working in the industry. By acting early, builders can maximise their options, minimise disruption, and protect their future in the construction industry.