SA builders Felmeri Group collapsed with $30m debts while family owned luxury properties across Australia
The family behind failed SA building company Felmeri Group amassed a luxury property portfolio worth nearly $12m when the company collapsed with $30m debt.
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The family behind failed builder Felmeri Group had amassed a property portfolio worth close to $12m by the time of the company’s collapse, while the company left dozens of customers with unfinished homes and creditors chasing close to $30m in unpaid debts.
Property records reveal that through various corporate entities, Felmeri founders Frank Felmeri senior, and his son Frank junior, controlled at least 10 properties valued about $11.6m, including a luxury home in Hallett Cove, an apartment on the Gold Coast and Felmeri’s previous headquarters in Wayville, which is estimated to be worth around $3.5m.
Frank junior’s $2.05m home in Burnside is owned by sister Julia, who was not involved in the failed business but is among its largest creditors, owed around $1.6m.
When complaints made by disgruntled customers of Felmeri Group flooded into the consumer watchdog earlier this year, few outside of the housing industry had heard of the family business that would go on to become one of the largest corporate collapses of its type in the state.
The failure has left more than 100 customers, including the state’s richest family, the country’s largest regional accommodation operator and dozens of first-home owners, with unfinished projects.
But questions are now being asked as to why Consumer and Business Services didn’t act sooner to prevent the company from taking on more work and racking up more debts amid a series of complaints dating back as far as 2020.
FOI documents obtained by The Advertiser reveal complaints about the company were raised with the consumer watchdog as early as 2020, with 10 individual matters about delays, defects and cost disputes lodged between July 2020 and February 2023, before the more recent spike in complaints leading up to the company’s collapse on May 19.
Felmeri was established in 2006, and initially focused on small housing and commercial projects.
But in the period leading up to and during Covid-19, the company embarked on a major expansion, taking on several major projects including its largest – construction of 100 townhouses at the $42m Wallaroo Shores resort project.
A former employee of Felmeri said the business suffered a $1.9m loss on that project alone in 2021-22, and was the nail in the coffin that brought the empire crashing down.
He said Frank junior led the day-to-day running of the company, leveraging his business connections in Adelaide to win major projects, including construction of a race control building, bar, cafe and ablution blocks at the Shahin family’s The Bend Motorsport Park.
“He’s ambitious and he’s a very good salesman,” the former employee, who declined to be named, said of Frank junior.
“Frank (junior) had enough relationships with enough businesspeople in Adelaide to be able to get enough work for everyone basically.
“It meant he could get his hands on bigger developments than your smaller mum-and-dad clients.”
Frank junior has declined to speak publicly about the company’s demise, or address questions as to why around 20 of the 120 affected customers did not have building indemnity insurance, which builders are required to arrange before construction begins.
In a rare interview in 2016, he described the company’s culture as “customer focused”.
“Our aim is to give our clients the value that they don’t get elsewhere. We do that by listening to them, paying attention to what they want and being a bit innovative,” he said at the time.
“In Adelaide, you get more referrals. You need to be really careful that you’re doing the right thing by your clients and that you’re networking effectively… It is dominated by relationships, rather than just purely advertising to the market.
“Which is a good thing… people know you and understand what you’re about.”
Former Felmeri customer Edward Gilmore was left with an unfinished home in O’Halloran Hill following Felmeri’s collapse, and is leading a campaign to secure state government support for construction of an incomplete road that is preventing about 20 families from finishing work on their new homes.
In a letter sent to Premier Peter Malinauskas this week, he said several families in his estate had lodged concerns with CBS over the past few years, but no action had been taken.
“We were either dismissed or told to get our lawyer to deal with issues with Felmeri Homes,” he said.
“We are incredibly saddened to hear how many other people also made complaints about Felmeri to CBS and the MBA (Master Builders Association) in recent years.”
Felmeri’s collapse has sent shockwaves through the local housing industry, which had previously remained largely immune from the spate of collapses in the eastern states.
An industry source said the scale of the collapse came as a surprise, and shone a poor light on an industry already struggling with higher costs and an uncertain economic outlook.
“I didn’t realise how many jobs they had under construction – the size of the issue blew me away,” he said.
“I think every time a builder goes under it puts the industry in a bad light. I think it raises suspicion when people are already nervous.”
Master Builders Association SA chief executive Will Frogley said the industry body acted “quickly and appropriately” after becoming concerned about Felmeri Group earlier this year.
“In addition to revoking Felmeri’s MBA membership, we moved quickly to report our concerns and share the information we had with the CBS,” he said.
“[Collapsed] businesses like Felmeri not only hurt hardworking families trying to build their dream home, they undermine confidence in our industry.”
Properties owned by the Felmeris are now being eyed by liquidators as they look to recover debts owed to the company’s creditors, who according to the latest estimates, can expect a return of up to 2 cents in the dollar.
A CBS spokesman said its investigation into Felmeri Group was continuing and it was unable to provide any further detail.
“In terms of the matters raised relating to Felmeri, a large proportion of the complaints prior to February 2023 involved defects in completed builds and were resolved through compulsory conciliation conferences between the consumer and the builder,” he said.
“The complaints dealt with in that period are unrelated to matters that are currently under investigation.”
Frank senior declined to comment.
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