Coombs Barei Constructions directors pinpoint financial woes to dispute over two major projects according to administrators’ report

COOMBS Barei Construction directors say problems with two major construction projects led to the company’s collapse.

Lawyer and Adelaide United chairman Greg Griffin, left, arriving at Coombs Barei Constructions meeting earlier this month with client Mario Colangelo whose concreting firm is owed $74,000. Picture: Calum Robertson

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DIRECTORS of failed builder Coombs Barei Constructions have cited disputes over the construction of a city apartment building and an aged-care home as major causes of their company’s $6.5 million collapse, a creditor’s report says.

But administrators of the Hindmarsh firm, which was placed in administration last month with the loss of nine jobs, have also blamed a lack of control and management by directors Tony Basile and George Charalabidis for the company’s woes.

The assessments are contained in a 22-page investigative report into Coombs Barei published by administrators DuncanPowell who found:

THE company was most likely trading insolvent from the last quarter 2016;

THE ATO had issued directors penalty notices against Mr Basile and Mr Charalabidis in July over the failure to pay $1.17 million in PAYG tax;

BETWEEN March and October this year the company was issued with 11 creditors statutory demands and was a defendant in 14 court cases;

RELATED companies had advanced more than $1.7 million in the year prior to the administration to try to keep the company afloat;

FROM February the company began entering into payment agreements with its creditors;

THE company incurred trading losses of $1.9 million for the year ending June 30 and had a net deficit of $3.1 million at the time of administration;

MORE than $500,000 in payments to trade creditors could be considered preferential and recoverable by a liquidator.

DuncanPowell has recommended Coombs Barei be liquidated.

According to the administrators’ report, Mr Basile and Mr Charalabidis, who are shareholders in Adelaide United, blamed the company’s position on high expenses, tightening margins and a failure to close out projects in a “timely manner”.

“The directors advised that the company began to experience operational issues during the second half of 2016 and specifically in relation to its performance on the Storeys apartment project (Surflen St), together with its failure to resolve the issues preventing the release of the ($476,000) cash retention in relation to the Martindale Aged Care project (Gawler),” the report said.

“The delays on the Storeys project led to delays in progress claims and payments being released to it, which in turn impact the company’s ability to pay subcontractors on time.

“Certain clients terminated construction projects with the company in September and October 2017 with substantial work in progress and progress claims outstanding and unpaid, thereby having a terminal impact on the company’s cash position and its ability to meet its liabilities to creditors.”

Fleurieu Cranes issued a statutory demand in March seeking payment of $102,000 for work it had undertaken on the Storeys apartment and administrators said the failure to deal with that demand in a timely manner also contributed to the financial issues.