New law could see construction companies fail as “two-tier” industry created – says BDO expert.
Some New Zealand construction companies will begin to fail in the next 12 months as the impacts of a new law begin to bite.
So says James MacQueen – advisory partner in the construction and real estate sector for business advisory and accountancy firm BDO.
He says the sector is largely unaware of the impact of amendments to the Construction Contracts Act which came into force on March 31.
‘It’s not all doom and gloom’ says MacQueen.
‘Some construction companies will come out of this stronger and will be preferred partners for property owners and sub-contractors.
But the current boom has provided an opportunity for many new constructions companies to set up – and some will not survive due to the change in the law’.
That change was made after the 2013 collapse of Mainzeal – leaving unsecured creditor debts of at least $112 million –
– of which a substantial portion were subcontractors.