Felmeri directors fail to submit rescue plan ahead of creditors’ meeting

Hopes a white knight had been found to complete construction of unfinished homes in Adelaide left in limbo following the collapse of Felmeri Group have been dashed.

Hopes a white knight had been found to complete construction of unfinished homes left in limbo following the collapse of South Australian builder the Felmeri Group have been dashed, with the company’s directors failing to submit their promised rescue plan to administrators.

Felmeri directors Frank Felmeri and his son, also named Frank, had previously said they were in talks with a national construction firm, and later a local South Australian builder, on a deed of company arrangement (DOCA) proposal designed to revive the company and resume work on certain projects.

Administrator Leigh Prior of Agile Business Advisory had given them until Monday to provide details of the DOCA, but confirmed in a letter to creditors on Wednesday, that no such proposal had been submitted ahead of a critical meeting next week.

It means liquidators will likely be appointed to wind up Felmeri at that meeting of creditors on Monday, leaving customers to complete their projects independently through insurer QBE.

However, Mr Prior has previously warned 20 of the 120 customers affected by Felmeri’s collapse did not have the required building indemnity insurance, while others would still be left out of pocket given the insurance only covers up to $150,000 in additional costs required to complete individual builds.

Edward Gilmore inside his unfinished home at Adelaide’s O'Halloran Hill. Picture: Kelly Barnes

Edward Gilmore is hoping that cap is enough to cover the cost of completing his family’s dream home at O’Halloran Hill south of Adelaide, which has turned into a nightmare after three years of delays.

He said further investigations would determine how much remedial work was needed, and what that would cost following a period of inflation across the building industry.

“If what we’ve paid for, if it’s completely fine, then we might scrape in, but things like the retaining out the back, which they didn’t do properly, the removal of a massive amount of earth down the back, landscaping, that type of stuff would be out of pocket for us it looks like,” he said.

“And things like the upgrades that we had considered, there’s no way we’d be able to afford some of them.

“We wanted a stone benchtop, that’s going to be out of the question. Some of the things that we wanted to have, those little luxury items, as the first house that we’ve built together, looks like they’re going to be well and truly out the window.”

Mr Gilmore said the past three years had “soured the whole experience” of building a home for his young family.

“We’ve got such a bad experience with it, that we don’t even really want to live there,” he said.

“The memories that we’ve had throughout this whole entire period, and the stress and strain that has put under us as a family, we’re really feeling pretty negative about the whole thing as you can imagine.

“We constantly get told things are happening behind the scenes, and everyone in government really feels for us, and it’s a terrible situation that we’re in, but we’re just basically being led along.”

More unfinished homes at O’Halloran Hill in southern Adelaide. Picture: Keryn Stevens

In his letter to creditors, Mr Prior said the Felmeris were still planning to put a DOCA proposal to creditors, but it would be too late for him to properly consider it ahead of next week’s meeting.

“I have made numerous requests of the directors, and their advisers, that any DOCA be provided to me with sufficient time to allow reasonable consideration by myself and, subsequently, creditors,” he said.

“Noting that the reconvened meeting is to be held shortly … the late provision of a DOCA will no longer provide sufficient time for me to consider any proposal and to provide a report on the terms of the proposed DOCA, my analysis thereof, and my recommendations, and for creditors to consider any such report, ahead of the reconvened meeting.”

If a DOCA is submitted ahead of Monday’s meeting, and later approved by creditors, control of the company would return to its directors.

Mr Gilmore is among a group of customers concerned about what that would potentially mean for QBE and its obligation to pay out on its building indemnity policies, given Felmeri would no longer be considered insolvent.

In his letter, Mr Prior said the insurer would provide further advice on that “once they have had the opportunity to consider any proposed DOCA”.

Mr Prior’s most recent estimate suggests Felmeri’s debts currently stand at more than $20m.