Creditors of Hummingbird Homes have voted to hand back control to the company’s director

CREDITORS of failed home builder Hummingbird Homes SA have handed back control to the company’s director, who has denied suggestions the company was trading insolvent before its collapse.

Hummingbird Homes SA director Daniel McOmish.

CREDITORS of failed home builder Hummingbird Homes SA have handed back control to the company’s director, who has denied suggestions the company was trading insolvent before its collapse.

Hummingbird director Daniel McOmish will oversee the deed of company arrangement (DOCA) proposal put forward by his father Ross.

Administrators predict it will recover up to 0.9 cents in the dollar for unsecured creditors who are owed $1.3 million.

Following yesterday’s vote by creditors, Mr McOmish told The Advertiser he’d exhausted “every conceivable means” to avoid the company from collapsing.

“That’s involved significant input by me, from a financial and time perspective, spending 18 hours a day to make it work,” he said.

“It (DOCA) provides a significantly higher return to the vast majority of existing creditors - that’s why they voted for it.”

Mr McOmish denied administrator Stephen James’ earlier claims that the company may have been trading insolvent for at least a year before entering administration.

“If I thought it was insolvent I wouldn’t have put any money in, I would have walked away 18 months ago,” he said.

Addressing creditors earlier, Ross said his son had injected $1.15 million into the business since encountering cash-flow problems in late 2016, topped up by a $250,000 contribution from himself. He will contribute an additional $85,000 as part of the DOCA.

“This is a story of a 25-year old who started this business 11 or 12 years ago,” he told creditors.

“He enjoyed significant success. But it (Hummingbird) has in recent years faced some issues, some major litigation . . . but over and above that it’s not a good market and Hummingbird has encountered rough trading conditions.

“It’s not a happy ending. His parents are proud of what he’s tried to do. We’re disappointed with the way it’s turned out. I’m very disappointed, but I’m more disappointed for Daniel than I am for myself. I’m disappointed that the expectations and the hopes that he had have not been realised by him.”

In his recent report to creditors, Mr James had recommended the company be liquidated, suggesting that scenario would recover up to 6.7 cents in the dollar.

However, liquidation would have also exposed 100 of the company’s 145 creditors to a potential clawback of payments received from Hummingbird in the six months leading up to the company’s collapse.

Payments made to a creditor in the six months prior to administration can be recovered where the company was deemed to be insolvent at the time.

The DOCA will allow Hummingbird to proceed with a court case involving leaking cellars in a North Adelaide townhouse development, for which it has already incurred $300,000 in legal fees.

The McOmishes said they were yet to decide on whether to proceed with the litigation. Additional legal costs will reduce the dividend to creditors.

“What I can say is that there is a general reluctance to allow the engineer to avoid any responsibility to fix those cellars - it’s infuriating,” Ross said.

Daniel said all employees had been paid their entitlements, and that his other business interests, including housing and mixed-use developments at Kent Town and Marden, were unaffected by and independent from Hummingbird’s collapse.

Hummingbird Homes SA went into administration in December. The Leabrook builder was established in 2006 building luxury homes for clients largely in Adelaide’s eastern suburbs.