Victorian company in construction collapses into liquidation owing $1.2m, ‘no cash’ in bank account

Creditors of a collapsed company in the building sector learned just before Christmas that they will not recover a single cent of their lost money.

Creditors of a collapsed company in the building sector learned just before Christmas that they will not recover a single cent of their lost money.

Victorian business MMD Concrete Construction Pty Ltd went into voluntary liquidation in September owing more than $1.2 million to creditors.

Of that, $233,000 is owed to the Australian Taxation Office while $240,000 is owed to staff from unpaid wages, leave, retrenchment and superannuation. A further $6,366 of debt was racked up to the State Revenue Office and the Bank of Queensland has an outstanding debt of $30.

However, the rest of MMD’s debt, which makes up the bulk, is from related party loans — which is where companies or people associated with the director are owed money from the business. In this case, the sole director, Nick Burnett, was owed money, as was another company of his.

When the appointed liquidator, Scott Andersen of insolvency firm Worrells, took over the company’s accounts, there was “no cash” in one bank account, and the other was $30 in overdraft.

Mr Andersen lodged a statutory report into the company’s affairs right before Christmas, on December 18, obtained by news.com.au, where he informed creditors there were no assets to recover and as a result their dividend would be $0.

$240,000 is owed to staff from unpaid wages, leave, retrenchment and superannuation. Of that, $127,000 is owed in unpaid super. Picture: Facebook/MMD Concrete Construction

“Total Funds Available for Priority Creditors: Nil. Total Funds Available for Ordinary Unsecured Creditors: Nil,” the report read.

And you guessed it, the estimated amount of dollars and cents to pay them in a dividend was also nil.

“It appears unlikely that there will be sufficient recoveries to enable the payment of a dividend to any class of creditor,” Mr Andersen wrote.

MMD Concrete Construction has been a registered company since 2017, providing concreting services to building companies in Victoria, and was based out of Batesford near Geelong, southwest of Melbourne.

The business had ceased trading shortly before it went into liquidation.

Its sole director, Mr Burnett, blamed his firm’s demise on the Covid-19 pandemic and its “increasing” tax debt.

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Nick Burnett is owed the majority of the company’s debts.

Nick Burnett is the director of the business.

From 2019, this debt began to grow and MMD entered into various payment plans with the ATO to try to pay off its tax liabilities.

However, the liquidator believes it could have been trading insolvent for more than two years, according to his statutory report.

“It appears that the company was insolvent from at least 30 June 2021,” Mr Andersen wrote.

MMD made a low six figure profit in the 2021 and 2022 financial years. But in the most recent full financial year, it made a loss of a staggering $702,371.

Between June and September when the company went into liquidation, it racked up losses of a further $15,000.

Speaking to The Geelong Advertiser, Mr Burnett said all staff members would receive “every cent” owed to them. He also noted all local suppliers had been paid.

News.com.au attempted to contact Mr Burnett via social media.

MMD is situated near Geelong in Victoria. Picture: Facebook/MMD Concrete Construction

A staggering 2,349 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 8,471 business collapses year, almost 28 per cent were in the building and construction industry, according to new 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 $2.52 billion 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.

This year alone, news.com.au has reported on dozens of major builders that have collapsed.

Australia’s 13th biggest builder, Porter Davis, also collapsed in March, placing 1700 projects and another 779 empty blocks of land in jeopardy across Victoria and Queensland, while more than 1000 unsecured creditors are owed a whopping $71 million.

In one week in July, news.com.au reported on a new builder going into external administration every day.

In the last week, news.com.au has revealed two more builders going bust — Queensland-based Casa Building owing $3.7 million to creditors and NSW-based Workspace One owing $845,000.

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 company in construction collapses into liquidation owing $1.2m, ‘no cash’ in bank account