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News headings from LabourStart


Subbies left high and dry as companies close down

« Back to News Articles Subbies left high and dry as companies close down

Law firm Slater and Gordon is urging truckies, particularly sub-contractor drivers, to be aware of being owed money by companies which are on the verge of insolvency, after a number of TWU members have been left tens of thousands of dollars in debt.

Slater and Gordon commercial lawyer Rachel Cosentino said there were real concerns for vulnerable subcontractor drivers who were owed money by principal contractors who went into liquidation.

“Unlike employees, subcontractors are not protected from a company’s insolvency and it’s devastating to be left high and dry when a business which owes you money goes under,” she said.

“I’ve seen cases where sub-contractors buy a truck being sold by a haulage company for example, but that company goes into liquidation before ownership is transferred. This means the subbie doesn’t technically own the truck and has to line-up with other creditors to get his money back.

“When a company goes into liquidation there is very little that unsecured creditors can do if they are left out of pocket, other than putting in their proof of debt with the liquidator and waiting in line for a long time while the liquidator collects in all the assets.

“The liquidator also has broad powers to claw back ‘preferential payments’ made to any parties in the six months prior to the liquidation if the company was insolvent at the time of the payments.”

Ms Cosentino said there were important steps subcontractors could take to minimise the risks.

“Subcontractors can get directors to personally guarantee payments under a written subcontractor agreement.

“Subcontractors can also register any interest in purchased or hired vehicles on the Personal Property Securities Register.

“Acting on early warning signs such as late payments and broken promises by terminating the subcontract agreement for breach is also an important option.

“Obviously, the viability of this course depends on the opportunities for other work, but often subcontractors will be better off not working at all, than working and incurring expense for no pay.”