Major building developer goes under owing creditors $80m

A major development company has gone under, owing creditors in Queensland an eye-watering amount of money.

The development company behind a massive Gold Coast project has called in administrators, leaving creditors owed about $80m.

Nerang Street, which is developing the $500m Queen Street Village at South Port, has been impacted by funding issues on top of dealing with the Covid-19 pandemic, according to The Australian.

Robson Cotter Insolvency Group said unsecured creditors were estimated at $40.8m, including construction firm Tomkin, which is owed $16.2m.

Some stores have opened at Queen Street Village. Picture: Glenn Hampson

“The directors disclosed the main reasons for the company’s financial circumstances included a change in property market valuations, inability to meet funding arrangements and prior to that, the general impact of the Covid-19 pandemic,” a report to creditors said.

Secured creditors are owed about $43m, including $22m to Hutchinson Builders.

Colliers said it was under the instruction of the mortgage exercising power of sale to sell three adjoining sites totalling 5401sqm.

Nerang Street creditors will meet next Tuesday to decide whether to liquidate the company or arrange for a deed of company arrangement.

The first stage of the village recently opened with a Supa IGA supermarket, Dendy Cinemas and other retailers.

Nerang Street is just the latest Australian construction firm to face major financial difficulties in recent months.

Art Struct, in Brisbane, collapsed owing almost $2 million earlier this week.
The company, which specialised in luxury home renovations of inner-city homes, had been operating since 2006 before it went into administration.

Insolvency expert Jarvis Archer from Revive Financial was appointed to deal with the firm’s collapse.

He said the company had struggled after it suffered significant losses due to cost blowouts on materials while customers remained on fixed price contracts.
Art Struct had $844,000 of invoice and progress claims that were unable to be recovered, Mr Archer revealed, due to disputes from customers and issues with its building licence.

The building firm had all of its 14 contracts terminated by customers and ceased to trade in January, he added.

The construction industry is in crisis. Picture: istock

Dozens of collapses

The construction industry is in crisis thanks to a perfect storm of supply chain disruptions, skilled labour shortages, skyrocketing costs of materials and logistics, and extreme weather events.

Dozen of builders in Queensland alone have gone under.

Most recent was Queensland residential builder Oracle Building which went into liquidation in August, owing a reported $14 million and impacting 300 homes, 200 suppliers and subcontractors alongside 70 staff members who were made jobless.

Earlier this year, two major Australian construction companies, Gold Coast-based Condev and industry giant Probuild, went into liquidation.

Snowdon Developments was ordered into liquidation by the Victorian Supreme Court last month with 52 staff members, 550 homes and more than 250 creditors owed $28 million.

Others joined the list too including Inside Out Construction, Solido Builders, Waterford Homes, Affordable Modular Homes and Statement Builders.
Then there was NSW building company Willoughby Homes, which went into voluntary administration earlier this month, leaving at least 30 homes in limbo.
From Victoria to Queensland

National franchises like Hotondo Homes Horsham, which was also based in Victoria, collapsed earlier this month affecting 11 homeowners with $1.2 million in outstanding debt.

It is the second Hotondo Homes franchisee to go under this year, with its Hobart branch collapsing in January owing $1.3 million to creditors, according to a report from liquidator Revive Financial.
Norris Construction Group, which was in Geelong, collapsed in March with $27 million in debt.
It owes $3.2 million to around 140 staff that it is unlikely to be able to repay, according to the liquidator’s report.

Just last week a Melbourne-based company Blint Builders collapsed with approximately $1 million in outstanding debt owed to 50 creditors, according to the liquidators.
Another Queensland builder, Besse Construction also collapsed owing $1.7 million.

Originally published as Major building developer goes under owing creditors $80m