If Your Builder Goes Under: Lessons from the Bathla Collapse

31st August 2026

Finance & Budgeting Pre-Construction Legal & Contracts Investor News & Industry Insights

What happens if your builder goes bust? Learn the key differences between off-the-plan purchases and building on your land, plus practical next steps.

If Your Builder Goes Under: Lessons from the Bathla Collapse

What happens if your builder goes bust before your new home is finished? It is a question no home buyer wants to face, but understanding your contract, insurance and next steps can make a difficult situation easier to navigate.

In this Home Building Hub episode, Colin Bischof and Darren Brennan discuss the Bathla Group administration and what Australian home buyers can learn from it. Colin also shares his experience of completing his own home after his builder went into liquidation.

Their central message is practical: start by understanding what you have bought. An off-the-plan property purchase and a building contract on land you own can lead to very different recovery paths.

What happened to Bathla Group?

Bathla Group, which includes Universal Property Group and associated companies, entered voluntary administration on 25 August 2026. Teneo’s appointed administrators began managing the process and communicating with creditors.

The episode explores the financial pressure that can arise when a developer funds construction before receiving the balance of buyers’ purchase prices at settlement. Rising costs, delayed settlements and slower sales can put that model under strain.

For affected buyers, the important question is what happens to their particular contract and project. A group-wide announcement does not explain every buyer’s position. Check the legal entity named in your contract and obtain updates directly from the appointed administrator and your legal adviser.

Voluntary administration and liquidation - what is the difference?

These terms are often used interchangeably, but they describe different processes.

Voluntary administration places an independent administrator in control while the company’s financial position and future are assessed. Possible outcomes include returning control to directors, a deed of company arrangement or liquidation.

Liquidation involves winding up the company and dealing with its assets and debts.

Administration may create an opportunity to restructure or find a way forward, but it does not guarantee that a business will survive or that every home will be completed. Buyers need project-specific advice rather than assuming either the best or worst outcome.

Developer collapse versus builder collapse

Before deciding what to do, work out which type of agreement you have.

Buying a home off the plan

With an off-the-plan purchase, you generally sign a contract of sale for a property that has not yet been completed. You pay a deposit and the balance becomes payable at settlement under the contract.

The developer arranges construction and its funding. Your position centres on the sale contract, the deposit arrangements and the laws applying in that state.

Questions for your solicitor or conveyancer include:

• Which company is the seller under my contract?
• Who holds my deposit, and in what type of account?
• What do the completion and settlement provisions say?
• What is the sunset date, and what rights does it create?
• Have I received any notices requiring a response?

Do not assume that the insurance process for someone building on their own land will apply in the same way. Any statutory warranty or insurance rights need to be assessed for the particular property and jurisdiction.

Building on land you own

If you own the block and have engaged a builder under a domestic building contract, you generally pay through agreed progress stages as construction proceeds.

If that builder becomes insolvent, your next steps may involve the administrator, your lender, the relevant building regulator and your insurer or warranty provider.

Your protection depends on the applicable scheme, your project’s eligibility and the terms of your cover. Having a building contract does not, by itself, establish that every loss will be covered.

What to do if your builder goes bust

Colin’s experience highlights the value of getting organised early. Feeling upset is understandable, but keeping clear records helps you explain your position and respond to requests.

1. Save your building documents

Download documents from your builder’s portal while you still have access. Keep copies of:

• Your signed contract, specifications and variations.
• Working drawings, approvals and permits.
• Insurance certificates or notices of cover.
• Invoices, receipts and bank payment records.
• Emails and other written communication.
• Dated photographs showing construction progress.
• Inspection reports and any recorded defects.

Create a simple timeline of payments, completed stages and important correspondence. This can help your adviser, lender and insurer understand what has happened.

2. Confirm the appointment and contact the administrator

Seek reliable information about the exact company involved. Ask the appointed administrator about your project’s status, communication arrangements and any documents you need to submit.

Avoid relying on rumours or assuming another customer’s outcome will apply to you.

3. Contact your insurer or warranty provider

Provide your policy or cover details and ask:

• Does this event trigger cover for my project?
• What evidence and forms are required?
• What deadlines apply?
• Do inspections or approvals need to happen before further work?
• What limits, exclusions or excesses could affect assistance?

Before terminating your contract or appointing a replacement builder, obtain advice about the required process and any effect on your rights or cover.

4. Speak to your lender or mortgage broker

Your construction loan is with your lender. A builder’s collapse does not automatically cancel the debt or pause repayments.

Contact your lender early to discuss existing repayments, future drawdowns and the requirements for a replacement building contract. If delays create financial pressure, ask what assistance may be available rather than assuming payments have stopped.

5. Clarify site security responsibilities

The hosts discuss practical concerns such as temporary fencing and access to an unfinished home.

Ask the administrator, insurer and your legal adviser who controls the site and who is responsible for security and ongoing insurance. Clarify any arrangements before paying fencing hire, changing locks or arranging access. An unfinished construction site can also present safety risks.

6. Get independent advice and share reliable information

A solicitor experienced in building matters can help you understand your contract and options. Connecting with other affected customers may also help you identify useful updates and questions.

Use those groups for support, while checking legal and insurance decisions with the relevant professionals.

Will building insurance pay to finish your home?

The episode addresses a common misunderstanding: insurance is not a promise to pay the entire remaining build price or hand over the maximum policy amount.

You may still need to contribute the unpaid balance of your original contract. Eligible assistance can depend on additional completion costs, defects, policy conditions and applicable limits.

For example, imagine you have $180,000 left to pay under your original contract, but a replacement builder quotes $230,000 for the same remaining work. The difference is $50,000. That illustrates the kind of funding gap to investigate, rather than assuming insurance will pay the full $230,000. It is not a claim calculation or guarantee of payment.

Victoria’s DBI and Home Warranty schemes

Victoria’s Building and Plumbing Commission distinguishes between existing Domestic Building Insurance (DBI) and Home Warranty for new eligible contracts from 1 July 2026.

• Existing DBI cover continues under its policy terms. It has generally provided up to $300,000 for eligible losses where a builder dies, disappears or becomes insolvent.
• Home Warranty applies to eligible new domestic building work under eligible contracts signed on or after 1 July 2026, generally valued above $20,000. It offers broader potential assistance, with a maximum of $400,000 in total per home, subject to eligibility, limits and exclusions.

Confirm your scheme using your actual cover documents. An older DBI policy does not automatically become Home Warranty cover. Buyers outside Victoria should check the arrangements in their own jurisdiction.

What should off-the-plan buyers do?

Start with your solicitor or conveyancer and the appointed administrator. Ask for advice on your deposit, contract deadlines, project status and any proposed changes.

For NSW off-the-plan purchases, government guidance says deposit and instalment money must remain in a trust or controlled money account during the contract period and cannot be released to the vendor before settlement. Ask your adviser to confirm the arrangements for your payment and explain the process for any refund entitlement.

Sunset clauses also need careful handling. In NSW, a developer generally needs the buyer’s consent or a Supreme Court order to end an off-the-plan contract using a sunset clause. Do not assume the developer can simply cancel because the date has passed.

These protections do not eliminate delays or guarantee that a particular development will proceed.

How to reduce risk before signing a building contract

The hosts encourage buyers to do their homework before committing. Useful steps include:

• Check the builder’s registration and relevant history.
• Compare quotes against the same specifications and inclusions.
• Ask why a quote is substantially cheaper than competing offers.
• Obtain and read the applicable insurance or warranty documents.
• Have your contract reviewed before signing.
• Understand progress payment stages and how your lender releases funds.
• Confirm claimed work has reached the required stage before authorising payment, subject to your contract and professional advice.
• Keep traceable payment records and receipts.
• Discuss contingency funds and possible delays with your broker.

No checklist can guarantee that a builder will remain financially sound. It can, however, help you understand the commitment and identify questions before money changes hands.

Glossary of building and insolvency terms

• Voluntary administration:

  A process in which an independent administrator takes control while a company’s future is assessed.

• Liquidation:

  The winding up of a company and administration of its assets and debts.

• Deed of company arrangement (DOCA):

  A binding arrangement governing how a company’s affairs and creditor claims will be dealt with.

• Off-the-plan purchase:

  Buying a property before it has been completed, under a contract of sale.

• Progress payment:

  A payment linked to a stage of work under a building contract.

• Drawdown:

  Money released from a loan facility, such as a construction loan.

• Sunset clause:

  A contract provision connected to a specified event occurring by a particular date, subject to applicable law.

• Domestic Building Insurance (DBI):

  A form of building insurance whose eligibility, triggers and limits depend on the relevant scheme and policy.

Frequently asked questions

Will I lose my deposit if my developer goes into administration?

That depends on your contract, the applicable law and how the deposit is held. NSW has specific trust-account protections for off-the-plan deposits, but your adviser still needs to confirm your position and any process for recovering money.

Can I immediately hire another builder?

Get legal, lender and insurance advice first. Contract termination, inspections, claim approval and site access may need to be addressed before replacement work begins.

Does my construction loan stop when work stops?

No automatic pause follows a builder’s collapse. Speak to your lender about your obligations and any available assistance.

Does voluntary administration mean my home will never be finished?

No. Administration can lead to different outcomes, including a restructuring arrangement. Completion is not guaranteed, so obtain updates about your specific project.

Is the cheapest building quote the best option?

Price is only one consideration. Compare scope, exclusions, contractual terms, service and the builder’s capacity to deliver. A significantly lower quote deserves careful questions.

Further reading

The article draws on the episode transcript, with the following official resources used to clarify insolvency and consumer protections. Check current guidance before acting:

• Teneo’s Bathla Group administration portal

.

• ASIC - Voluntary administration: A guide for creditors

.

• Building and Plumbing Commission - Domestic Building Insurance and Home Warranty

.

• NSW Government - Buying property off the plan

.

Key Takeaways

• An off-the-plan purchase and a building contract on your own land can involve different protections and recovery processes.
• Voluntary administration is different from liquidation and does not guarantee a particular outcome.
• Save contracts, payment records, plans, cover documents and dated progress photos.
• Contact the administrator and obtain advice from your legal adviser, lender and applicable insurer or warranty provider.
• Insurance has conditions and limits. It does not automatically pay your entire remaining build cost.
• Your loan obligations do not automatically stop when construction stops.
• Check registration, contract terms, cover and payment arrangements before signing.

Watch the full episode

Hear Colin Bischof and Darren Brennan explain the differences between developer and builder insolvency, and share practical lessons from Colin’s own experience.

Watch “If Your Builder Goes Under: Lessons from the Bathla Collapse” on YouTube.

About the Home Building Hub Podcast

The Home Building Hub podcast, hosted by industry experts Colin Bischof and Darren Brennan, is Australia’s premier resource for new home buyers. With weekly episodes featuring special guests, the podcast provides objective, high-quality insights into the home building process - completely free and without sales pitches. From understanding financing options to navigating the complexities of building a new home, each episode is packed with actionable advice and tips. Explore more episodes at http://www.homebuildinghub.com.au and join our growing community of informed home buyers.

Disclaimer

This article was generated by AI based on a transcript of our podcast episode and may contain inaccuracies or omissions. Whilst we’re all about providing value to you, this article should not be considered as legal or financial advice. It contains general information only and is based on the content discussed during the podcast episode. This information is relevant to the episode’s release date and may not be applicable at the time of reading. Always seek independent professional advice tailored to your personal situation before making any legal or financial decisions.