Victorian builder collapses into administration, all construction work paused urgently

An urgent sales process is under way as work was stopped indefinitely on the sites of a collapsed building company.

A building company has appointed administrators and all work has urgently been paused, plunging nearly 100 homeowners into limbo.

On Monday, Victorian-based building firm Montego Homes Pty Ltd went into voluntary administration.

Sam Kaso and Shaun Matthews of insolvency firm Cor Cordis have been appointed as the administrators and halted all construction work while they desperately hunt for a buyer.

The building firm, with headquarters in South Melbourne, has reportedly left 90 homeowners in the lurch.

A further 11 people, who were staff at the business, also have an uncertain future.

The company’s headquarter are in Melbourne’s south.

Montego Homes has started 78 residential building projects since 2021, according to the Victorian Manage Insurance Authority (VMIA).

In a statement provided to news.com.au, the administrators said they were seeking a buyer “to restructure or recapitalise the business”.

They said they had begun an “urgent review” into the Montego’s financial position.

The company was directed by Todd Searle and Lachlan Lyndon.

It was registered as a business on the Australian Securities and Investment Commission (ASIC) five years ago, in September 2019.

On its still-active website, Montego Homes styles itself as a company offering house and land packages “across Australia”.

There are currently 21 active listings for the different house designs it offers.

“Build, buy, finance” is its motto.

News.com.au has contacted the administrators for comment.

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Montego Homes has gone into administration. Picture: Montego Homes

Montego Homes appears to be the first large building company to go bust in 2024, after a hellish two years for the construction industry.

A staggering 2349 construction firms have collapsed in the past year — with fears more may fall soon.

In times of economic hardship and inflation, building companies are usually the first to feel the pinch as they run on such small margins.

Indeed, of the 8471 business collapses for 2023, almost 28 per cent were in the building and construction industry, according to data put out by the corporate regulator.

The alarming trend has been blamed on a “perfect storm” of factors, including fixed price contracts, escalating costs, supply chain disruptions and tradie shortages.

The previous Morrison government’s HomeBuilder grant, which was introduced in June 2020 and handed out $2.52bn to owner-occupiers who wanted to build or substantially renovate a home, turbocharged the sector.

More than 130,000 customers signed on for the program, with many tradies agreeing to the work under fixed-price contracts that soon became unsustainable as prices began to soar.

Last year, news.com.au has reported on dozens of major builders that have collapsed including one week in July where a new builder went into external administration every day.

Shamefully, in 96 per cent of cases where small and medium sized businesses go under, only between zero and 11 cents is recovered for every dollar owed to out-of-pocket creditors.

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Originally published as Victorian builder collapses into administration, all construction work paused urgently