Coast to Coast Homes’ Sean Craven declares bankruptcy, liquidator says company traded insolvent
A failed home builder has declared himself bankrupt amid ongoing scrutiny over how his business collapse left creditors millions out of pocket. A liquidator says he traded insolvent for nearly a year.
- Coast to Coast customers lost $4m in insurance claims
- How to get the most out of your Advertiser subscription
Liquidators of failed home builder Coast to Coast Homes intend filing a claim of more than $4 million against the estate of the company’s now bankrupt director.
Sean Craven declared himself bankruptcy on August 15 nearly three months after the company was placed in liquidation leaving dozens of homeowners in limbo and 245 subcontractors out of pocket.
Liquidator Timothy Clifton of Clifton Hall has told creditors he planned to make an insolvent trading claim against Mr Craven’s bankrupt estate once he had investigated the company’s affairs.
“Based on preliminary investigations, the company is likely to have traded while insolvent from at least July 2018,” he wrote in a report to creditors filed with ASIC last week.
“On this basis, the quantum for a potential insolvent trading claim would be in excess of $4,000,000.”
A company trades insolvent when it continues to trade and incur debts knowing it cannot repay the money.
Mr Clifton estimated claims from unsecured creditors to be “in the order of $9.5 million, almost double what he had told creditors at a June meeting.
The upgraded figure included what he expected would be “in excess” of $5 million in home insurance claims.
He said insurer QBE had so far paid about $4.1 million to 46 property owners who have “incomplete or defective” buildings.
He said a “number” of property owners had indicated the cost to complete their homes would exceed the original contract price.
A “small number” of property owners did not have insurance because Coast to Coast Homes had failed to obtain a building insurance policy.
“These property owners will not have the benefit of an insurance policy and as a result may have significant claims against the company for incomplete works.,” Mr Clifton wrote.
He did not expect any financial return to creditors “in the absence of successful liquidator recoveries”.
Mr Clifton said he would demand payment of $14,599 in unpaid share capital from Mr Craven’s wife Margaret Nelson.
He said preliminary investigations indicated that Mrs Nelson paid $180,000 to the company for the construction of a display home in mid-2018 on land she owned.
“I am currently reviewing the commerciality of this transaction to determine whether it may constitute a voidable transaction or unreasonable director-related transaction,” he wrote.