Failure to honour payment obligations adversely affects parties to a construction contract. It could lead to potentially crippling consequences of insolvency. Evidences of this abound in New Zealand within Newspaper articles and liquidators' reports. The report shows that liquidation is prevalent in the construction industry and it cuts across all its subsectors. This paper analyses liquidators' report for 50 construction companies in two main subsectors of the construction industry viz: general construction and construction trade services. It then presents the reasons for liquidation and the magnitude of losses experienced by construction parties as a result of liquidation. The study finds that 75% of companies analyzed went into voluntary liquidation, with the most frequent cause for liquidation being financial losses due to bad debts;downturn in construction market and corresponding drop in property prices, non-payment and cash flow problems; and general economic conditions. Trade creditors accounted for about 70% of total monies owed to unsecured creditors. Losses experienced by trade creditors due to liquidation of companies within the general construction subsector was in the NZ$100-500 Thousand range with 15% suffering losses above NZ$1 Million. Trade creditors were mostly owed less than $100 Thousand and few above $200 Thousand by companies within the construction trade service subsector. It is noteworthy that in liquidation, only 5% of companies were able to pay unsecured creditors fully; while 15% managed to pay 20% of the amounts owed. Generally lower tier construction parties could only be paid 14% of the total sums owed to them.
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