Receiverships Jump 71pc as Private Credit Tightens Grip on Distressed Projects

In data that might raise some eyebrows, insolvencies in the construction sector actually dropped last year for the first time since 2021. Admittedly, the decline was incremental. According to ASIC insolvency data, in the last full financial year 2025-26 there were 3472 construction companies entering administration for the first time, down 4.7 per cent on the year before. This trend has continued this financial year. The latest ASIC data published this month shows 501 insolvencies in the construction sector so far, a 7.2 per cent decline on the 537 insolvencies in the same period last year. But the latest round of data gives with one hand and takes with the other, insolvency practitioner and GM Advisory director Ginette Muller says. “At first glance, the latest ASIC figures suggest conditions may be improving, with total construction insolvencies recording a modest decline,” Muller says. But the construction sector still accounts for a quarter of all corporate insolvencies in Australia, and a deeper analysis of the types of insolvency appointments reveals a very different story. What does insolvency data say? The several types of insolvency can roughly be placed in two camps. Generally, court liquidations and receiverships tend to indicate that the company has been forced into insolvency by the actions of creditors. Voluntary liquidations—which bigger companies tend to undertake—and restructuring, advised for smaller businesses with under a million dollars of debt, can suggest that company directors have tried to take action to salvage a business. Restructuring appointments have so far plummeted in this new financial year to 182, from 398 in the same period in 2024 and 284 in 2025. This continues the trend emerging in 2025-26 in which there was a 43 per cent decline in restructuring. ▲ GM advisory director Ginette Muller: Administration volume declines are a red herring as we move into a new phase for construction insolvencies. Receiverships however have skyrocketed. They increased 71 per cent last year to 125 receiver-appointed administrations, compared to 73 in 2024-25. So far this year, there have been 20 receiver appointments in the construction sector, compared to 17 last year, seven in 2024 and only four the year before that. “The most striking statistic is the fall in small business restructuring appointments combined with a 22 per cent increase in court liquidations,” Muller says. “This suggests fewer companies are entering formal restructuring processes designed to preserve the business and more are proceeding directly towards closure.” It also could indicate that the ‘zombie businesses’ of the Covid era have already exited the market, she says, and that the remaining businesses are stronger operators. Overall, the data shows that financial stress within the sector is becoming more severe and increasingly creditor-driven, Muller says. “Rather than signalling a return to health, the data suggests the industry is entering a more mature phase of the insolvency cycle, where rescue options are diminishing and external stakeholders, particularly creditors and financiers, are taking greater control of outcomes.” Financiers and creditors cracking down on construction A consideration of insolvencies could not be undertaken without mentioning Bathla, which undertook a voluntary administration earlier this month —one which was likely prompted by creditors, Muller says. And financiers are likely to become more aggressive, with the growing funding influence of non-bank lenders, offshore financiers and private capital changing how businesses deal with stress. ▲ Bathla submitted new plans for a project in Canterbury in January, but entered administration before the year was up ( also pictured top ). “While major banks typically operate within established workout frameworks, alternative financiers are often more commercially driven and quicker to enforce their security,” Muller says. “The sharp rise in receiverships may therefore reflect the consequences of this shift in funding sources. This suggests lenders are taking a more active role in managing distressed projects, which is often a leading indicator of broader stress across the development pipeline.” This has already been the case, with financiers like Metrics Credit Partners taing on projects from developers, and looks set to continue, Muller says. “After Covid, people were somewhat prepared to give time to debtors, but that has changed now.” Future of construction sector insolvencies With interest rates expected to rise again and house prices dropping across the country, the pressure is on. CreditorWatch chief economist Ivan Colhoun says that when house prices decline, residential construction can naturally slow down. “So far, building approvals are holding up and have been actually rising,” Colhoun says, “but there was a reasonably sharp fall in private sector house approvals in July. So that could be the turning point.” With these macroeconomic conditions, Colhoun expects insolvencies to rise again, but there could be some positives in the market, rather than just the doom and gloom of insolvency news. “We've got this boom in data centre builds, for instance, so that's a part of the construction sector that's actually growing very strongly,” Colhoun says. ▲ CreditorWatch chief economist Ivan Colhoun: Insolvencies could increase, but there are still opportunities for the construction sector. “And generally, there is strong demand in the commercial construction space, and then when interest rates drop, we would expect housing activity to pick back up. So it’s a bit of a seesaw or a balancing act.” Whether construction companies could pivot to commercial remains to be seen, but there are already mechanisms in place to help the construction sector, including cost plus contracts and progress payment schedules which help builder cashflow, Muller says. “For developers, the key message is that funding risk has become as important as construction risk,” Muller says. “It’s human nature to think we’ll get through this. But builders need to talk to their creditors, coming up with repayment arrangements and acting early if you want to change this outcome.”

Exclusive
Clare Burnett
Fri 11 Sep 26

Receiverships Jump 71pc as Private Credit Tightens Grip on Distressed Projects

Get the full story.

‘No Shortage of Ambition’: Kapitol’s National Modular Push

Private Credit’s SEQ Risk Radar Swings to Market

Your Land is Worth Millions—Until the State Makes Its Own Plans

Sites Are Scarce, Backlash Is Growing

Land Lease Sector Tipped to Overtake Retirement Living by 2031

Project Showcase: Inside the Industry’s Best Projects for Australian Seniors

Webinar: Co-Living In Focus

Webinar: Data Centres In Focus

On the Ground: Sketches from the Future, Lessons from the Past

Regulator Maps State’s Riskiest Suburbs for Building Defects

Kaymet Plots 18-Storey $126m Bankstown Centre Shoptop