Liquidators have a reputation that keeps builders awake at night. According to Chris from Jirsch Sutherland, that fear is based on a misconception. His first question is never about closing a business down.
Nobody grows up wanting to be a liquidator.
Chris, a Partner at national insolvency firm Jirsch Sutherland, is the first to acknowledge that. But after more than two decades in the industry and over 2,000 matters under his belt, he has developed a sharp view on why builders fear the wrong thing when financial pressure hits.
He joined Aaron on The Good Builder Podcast to lift the lid on how insolvency actually works, what it means for building businesses, and why the phone call that nobody wants to make might be the most important call a struggling builder ever takes.
The Industry Nobody Wants to Need
Construction has been the leading industry for corporate insolvencies in Australia for the past several years. According to data tracked by ASIC since 1999, construction sits at number one or two in insolvency statistics year on year without exception.
Against a 20-year national average of roughly 10,000 company collapses per year, recent years have pushed well above that. In the 2025 financial year, Australia recorded around 15,000 insolvencies, with construction accounting for a significant share.
Chris put the forward projection bluntly during the podcast conversation with Aaron.
“There’s about 15,000 to 16,000 insolvencies expected. Give it about 25 percent, there’s going to be about 4,000 in construction.”
Chris, Jirsch Sutherland
That figure is not a sign the industry is uniquely broken. It is partly a structural reality. Construction is made up of thousands of individual companies, many of which are sole traders operating under a company structure on the advice of their accountant. When you have high company numbers, you have higher absolute failure counts.
But the pattern is also driven by something more specific to how construction works: cashflow misalignment.
Why Cashflow Breaks Builders
Chris explains the underlying dynamic simply. Builders are the conduit between clients and subcontractors. They collect money from one side and pay out the other. The problem is that the timing never lines up.
“You’re only getting your money from your customer once every 120 days, once every 90 days. But you’re paying the subbies every seven days, every fourteen. So you’ve got eight payment cycles out of your business for every one that comes in.”
Chris, Jirsch Sutherland
On top of that, margins in construction are thin. For large builders, they can be less than two digits. When payment cycles are misaligned and margins are tight, a single project running long, a variation dispute, or a client withholding a progress payment can tip a business into technical insolvency before the director has even processed what is happening.
Insolvency, Chris is careful to explain, is not the same as liquidation. Insolvency is a concept. Liquidation is a state. Insolvency simply means the inability to pay debts as they fall due. A builder can be temporarily insolvent, unable to pay a bill on time because cash is expected in from a progress claim, and then recover.
The trouble comes when that state becomes persistent, when cash does not arrive, when bills compound, and when no one has been called in to help.
The First Question Is Not What You Expect
Most builders assume that calling in a liquidator means handing over the keys. That assumption stops many from seeking help until it is far too late.
Chris pushes back on this idea directly.
“My first thinking is how do I keep this business alive? I say to even my lawyer friends and accounting friends: don’t be afraid to call me into a meeting. With the powers that I’ve got and all the wonderful strings I can pull, what could I do?”
Chris, Jirsch Sutherland
That is not marketing language. It reflects the legal purpose of modern insolvency practitioners, which is to preserve value in a business and maximise the chance of it continuing to operate wherever possible.
Chris describes the two-part mandate clearly. First: can the business be saved? Second: if it cannot, how do you wind it down in a way that is orderly, fast, and maximises what goes back to creditors?
He has saved businesses at both ends of the spectrum, from small single-trade operations to ASX-listed companies. And he has turned directors away when he has diagnosed that the actual problem is not what the director thought it was.
One example he shares during the conversation involves an NDIS operator who came in convinced the ATO was the threat. After working through the questions, Chris identified the real problem: a third-tier lender charging close to 80 percent interest, with a personal guarantee attached.
“The tax man is a very principled, process-driven animal. As long as we’re following the process, we can manage that. But that third-tier lender that’s got you by the nuts for 80 percent interest rates, that’s the guy that’s really going to jam you hard.”
Chris, Jirsch Sutherland
Bankruptcy Versus Liquidation: Getting the Terms Right
One of the most valuable parts of the conversation is Chris drawing a clear line between two terms that are regularly confused, including by builders.
Bankruptcy applies to human beings in Australia. Liquidation applies to companies. The confusion partly comes from American media, where chapter eleven bankruptcy is used for corporations, a concept that does not translate directly to Australian law.
For individual tradespeople operating as sole traders, or directors who have signed personal guarantees, bankruptcy is the relevant process. It can be entered voluntarily or triggered by creditors through the court.
A common assumption is that bankruptcy means losing everything. Chris corrects this.
“We can’t touch your superannuation that sits inside a regulated and properly managed super fund. You’re allowed to keep a car up to the value of about nine thousand odd dollars. You can keep your bed, your furniture, a fridge, your microwave. We’re not trying to completely debilitate someone from being able to earn an income and get back on the horse.”
Chris, Jirsch Sutherland
There are also three legal pathways out of bankruptcy: having the order set aside if it should not have been made in the first place; having creditors paid out in full from unexpected funds; and doing a deal with the creditor body where a reduced payment is accepted in exchange for discharge.
None of these are widely understood by the building community, which is part of why the process feels more terminal than it actually is.
What to Do Before It Gets to That Point
The conversation repeatedly returns to one central message. When something does not feel right, get professional advice early.
Chris is direct about what he sees most often in businesses that fail. It is rarely catastrophic incompetence. It is usually experienced operators relying on instinct in an environment that has outgrown informal decision-making.
“We see so many common mistakes made by directors running businesses. It’s almost like I can almost predict it. After 2,000-plus businesses, I can see where it’s heading.”
Chris, Jirsch Sutherland
His practical advice for builders is consistent with what good operators already do: have a trusted accountant and a trusted lawyer on speed dial, not just to call when things collapse, but as ongoing advisors who know your business well enough to spot the warning signs before they compound.
Problems in business are almost always either financial or legal in nature. Having the right advisors in place means that when a situation arises, there is a clear path forward rather than a spiral of delayed decisions.
Chris also makes the case that clarity itself is the antidote to the sleepless nights many builders experience.
“A lack of clarity is what keeps a builder lying awake at night. I’ve always prided myself that even if I met someone for the first time, they walk away with crystal-clear clarity. Once you’ve got clarity, your brain switches into problem-solving mode. The worry disappears.”
Chris, Jirsch Sutherland
The Numbers Are Only Getting Tighter
The outlook for the next 12 months is sobering. Chris believes Australia is still working through the delayed fallout from COVID-era stimulus and the construction boom that followed.
His view is that economic disruptions typically take 12 to 18 months to filter through to insolvency numbers. The fuel price volatility and broader cost pressures of recent years have not fully registered yet in collapse statistics.
For builders who overtraded during the HomeBuilder era, who took on more contracts than their cashflow, trades, or systems could comfortably carry, the reckoning may still be coming.
Chris frames the distinction between operators who will weather this period and those who will not in simple terms.
“Good operators have already worked out how they’re going to hedge their situation. And they probably even hedged it long before all the craziness started. Whereas if you’re not a good operator, you’re going to be reactionary to the circumstance right in front of your face.”
Chris, Jirsch Sutherland
His definition of a good builder, when Aaron put the question to him, came down to two things: knowing your numbers, and continuously improving your systems. Neither requires a law degree or an accounting qualification. Both require discipline and attention.
Chris put it plainly.
“Know your numbers. Know where you’re losing the cents in the project, where you’re hemorrhaging money. And continually improve your systems for producing your product. Get better with technology. Remove paper from the equation. If you can just become super efficient and know your numbers, we never have to meet, except over a beer.”
Chris, Jirsch Sutherland
Construction has the highest insolvency rate of any Australian industry. That will not change quickly. But the fear of calling in help is often more damaging than the problem itself. Builders who get professional advice early, before debts compound and options narrow, consistently have more paths available to them.
Chris is not the Grim Reaper. He is closer to a diagnostician who sees the same problems on repeat and can usually identify what is actually killing the business, which is often not what the director thinks.
If the numbers are not adding up, if there is a third-tier lender charging eye-watering interest, if cash is tight and the ATO letters are starting to arrive, the worst thing to do is wait.
Know your numbers. Get good advisors around you. Call early.
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Disclaimer: This article is based on a recorded conversation on The Good Builder Podcast. Nothing in this article constitutes legal or financial advice. Builders experiencing financial difficulty should seek independent professional advice from a qualified accountant, lawyer, or registered insolvency practitioner.
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