Walton and the Phoenix
Walton Construction collapsed over six months ago. Many of the unsecured creditors are still left wondering if they’ll get anything back. Unfortunately for them, statistics show that an unsecured creditor in the construction industry gets less than 1c in the dollar. We feel for them. Cases like this are the very reason we at CheckVault are so passionate about making sure businesses can get their payments secured.
Interestingly, according to one source Walton Construction had a record as a good payer. “Walton was our best payer,” one Townsville subcontractor said. That was, until October last year.
Today the Australian Securities and Investment Commission (ASIC) are again looking into the collapse where they have given evidence in the Federal Court. Walton is said to have been involved in setting up Peloton Builders (later renamed Tantallon) and Lewton Asset Services as phoenix companies.
Phoenix companies are those which emerge from the ashes of insolvency, stripping the original company of some or all of its assets.
As ABC notes in their article today: ” There is legislation aimed at protecting subcontractors, such as Security of Payments acts, but that requires subcontractors to fight their case in court, which is expensive and time consuming, and a court finding that a subcontractor is owed money is all but worthless if the head contractor is insolvent.”
CheckVault allows you to make sure you are a secured creditor with funds that are due to you are held independently until the agreed work is complete. In the case of head contractor insolvency, as the monies are not part of the head contractors assets, they cannot be assumed by the liquidator.