{"id":39800,"date":"2022-08-03T22:46:27","date_gmt":"2022-08-03T10:46:27","guid":{"rendered":"https:\/\/propertynoise.co.nz\/au\/?p=39800"},"modified":"2022-08-03T22:46:27","modified_gmt":"2022-08-03T10:46:27","slug":"collapsed-building-company-owes-staggering-debt","status":"publish","type":"post","link":"https:\/\/propertynoise.co.nz\/au\/collapsed-building-company-owes-staggering-debt\/","title":{"rendered":"Collapsed building company owes staggering debt"},"content":{"rendered":"

PHOTO: Norris Construction Group<\/strong><\/p>\n

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A collapsed Victorian construction company<\/a> has $27 million in debt and owes $3.2 million to around 140 staff that it is unlikely to be able to repay, according to the liquidator\u2019s report which revealed what went wrong.<\/p>\n

\"Condev\"<\/a><\/div>\n
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Second major Australian construction company COLLAPSES<\/a><\/h2>\n<\/header>\n<\/div>\n<\/div>\n

The Geelong-based company called Norris Construction Group, which included seven associated companies, went under in March with KordaMentha appointed to handle the liquidation.<\/p>\n

Its report, which was filed with the Australian Securities and Investments Commission, revealed the range of reasons for the company\u2019s failure.<\/p>\n

It included the \u201cmisprising of projects\u201d and a \u201ccrisis of confidence\u201d experienced by the business during lockdowns in Victoria between March and October 2020 resulting in projects being tendered at \u201cvery low prices\u201d.<\/p>\n

\"Solido<\/a><\/div>\n
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Queensland company Solido Builders joins long list of construction firms biting the dust | WATCH<\/a><\/h2>\n<\/header>\n<\/div>\n

This resulted in \u201cheavy losses\u201d on a very large number of projects, the report to creditor\u2019s said.<\/p>\n

It also outlined \u201ccultural issues amongst the executive team leading to staff losses and staff turnover\u201d as well as hiring new staff on \u201chigh remuneration packages\u201d.<\/p>\n

The pandemic also contributed to the company\u2019s demise, as well as \u201cnoncompliance\u201d with lodging statements and returns with the ATO and unpaid taxes, alongside \u201cinsufficient working capital\u201d to meet its short term obligations.<\/p>\n

\"construction<\/a><\/div>\n
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Material shortages throw Aussie\u2019s construction industry into disarray | WATCH<\/a><\/h2>\n<\/header>\n<\/div>\n

The company had completed work on the Manufutures hub at Deakin University and the Marngoneet and Chisholm Road prisons and worked across Melbourne and southwest Victoria.<\/p>\n

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\"Norris<\/div>\n

Norris Construction Group went under in March and employed 235 staff across its multiple companies. Picture: Alan Barber<\/strong><\/em><\/div>\n

Millions owed to employees<\/b><\/span><\/p>\n

From the overall group, 235 former employees are owed $4 million in wages and entitlements but will have to rely on the federal government\u2019s Fair Entitlements Guarantee (FEG) to get their money back.<\/p>\n

However the scheme, which is available for employees of companies that become insolvent, caps back pay and does not pay superannuation.<\/p>\n

\"Langford<\/a><\/div>\n
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Aside from the $3.2 million owed to employees of Norris Construction Group, there was between $187,000 and $277,000 owed to 235 staff from the overall group including wages, redundancy payouts and superannuation.<\/p>\n

But KordaMentha partner Andrew Knight said four out of the five companies that employed staff had \u201cinsufficient\u201d assets to pay back the money owed.<\/p>\n

\"Building<\/a><\/div>\n
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\u201cWe understand that for four of the five employing entities, FEG has processed and paid over 90 per cent of the employee claims,\u201d he said.<\/p>\n

\u201cFEG is still working on claims in the fifth entity, Norris Construction Group, which are more complex due to the quantity of claims as well as the relevant Award which applies to these employees. We estimate majority of these claims will be resolved and paid within the next month.<\/p>\n

\u201cUnfortunately, there are some entitlements that are not covered by FEG, for example superannuation and amounts in excess of caps, and payment of those are dependent on the outcome of the liquidations.\u201d<\/p>\n

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\"Sales<\/div>\n

Sales of assets raised $17 million but unsecured creditors are unlikely to be paid still. Picture: Alan Barber<\/strong><\/em><\/div>\n

While an auction of the company equipment and assets in May raised more than $17 million, and is expected to paid to Westpac, the bank will still suffer a \u201cshortfall\u201d, said Mr Knight as its owed $22 million.<\/p>\n

\"Pivotal<\/a><\/div>\n
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Construction firm Pivotal Homes COLLAPSES | WATCH<\/a><\/h2>\n<\/header>\n<\/div>\n

The ATO also has an outstanding debt of $5 million, the report revealed.<\/p>\n

However, the ATO debt was unlikely to be repaid, Mr Knight added.<\/p>\n

\"Waterford<\/a><\/div>\n
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BUILDING CRISIS: Another building company in liquidation<\/a><\/h2>\n<\/header>\n<\/div>\n

\u201cThe amount due to the ATO is unsecured, and given the likely shortfall to the employees and the secured creditor, it\u2019s unlikely unsecured creditors including the ATO will be paid a dividend,\u201d he said.<\/p>\n

The creditor\u2019s report also flagged it was investigating any potential offences of director\u2019s duties including trading while insolvent.<\/p>\n

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\"Norris<\/div>\n

Norris Construction Group exterior in Gravel Pits Road, South Geelong. Picture: Alan Barber<\/strong><\/em><\/div>\n

Construction crisis<\/b><\/span><\/p>\n

Overall, the construction industry has been plagued with a spate of collapses caused by a perfect storm of supply chain disruptions, skilled labour shortages, skyrocketing costs of materials and logistics, and extreme weather events.<\/p>\n

Earlier this year, two major Australian construction companies,\u00a0Gold Coast-based Condev<\/a>\u00a0and\u00a0industry giant Probuild<\/a>, went into liquidation.<\/p>\n

Victorian construction companies have been particularly sensitive to the crisis.<\/p>\n

Two building companies from Victoria were\u00a0casualties of the crisis<\/a>\u00a0having gone into liquidation at the end of June, with one homeowner having forked out $300,000 for a now half-built house.<\/p>\n

Then there have been smaller operators like Hotondo Homes Horsham, which was also based in Victoria and a franchisee of a national construction firm \u2013 which collapsed earlier this month\u00a0affecting 11 homeowners\u00a0<\/a>with $1.2 million in outstanding debt.<\/p>\n

READ MORE VIA NEWS.COM.AU<\/a><\/p>\n

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