Failed builder NPM Group owes $40m

Failed construction business NPM Group owes about $40m, with subbies and other suppliers unlikely to see a cent returned to them by liquidators.

The building industry has been hit by a perfect storm of labour shortages and material price hikes in the past three years.

Failed construction group NPM Group owes about $40m with subbies and unsecured creditors unlikely to see a cent returned to them.

The prominent national builder left behind several major projects and laid off more than 100 full-time employees after appointing administrators Worrells last month.

NPM Group, which stands for National Projects and Maintenance, specialised in construction, fit-outs, minor works and maintenance projects in the commercial sector.

In a report lodged with ASIC, Worrells administrator Aaron Lucan said the net deficit of the group exceeded $40m, a figure that was likely to grow as more creditors lodged claims. Mr Lucan said that because the company’s assets would not be sufficient to pay out employees and secured creditors in full, unsecured creditors would not receive any return.

He said the only way unsecured creditors, which included subcontractors and suppliers, would receive anything would be through a deed of company arrangement or recoveries from voidable transactions or insolvent trading claims.

“Given the early stage of the administration, there is presently no estimate as to what that might be,” Mr Lucan said.

NPM director Daniel Alfonso said last month that “ongoing market pressures” made the continued operation of the company “untenable due to skilled labour shortages, inflationary pressures, interest rate rises and a commercial sector that continues to suffer from flow on effects of Covid-19”.

NPM was responsible for projects across Brisbane, New South Wales, Victoria, Western Australia, Australian Capital Territory and South Australia.

In Brisbane, that included St Catherine’s Primary School Ola Project, The Gap State High School canteen refurbishment, Ashmore State School SEU refurbishment, and MacGregor State School administration refurbishment.

The building industry has been hit by a perfect storm of labour shortages and material price hikes in the past three years, that has led to the demise of major builders including Probuild, Condev, Privium Homes, and Pivotal Homes.

Hutchinson Builders chairman Scott Hutchinson said conditions in the sector ­remained “terrible” and builders continued to face rising costs as well as difficulties hiring the required number of tradespeople to complete projects.

He said a building boom centred on the Gold Coast in 2021 had been predominantly responsible for driving costs higher.

“It was that boom out of Goldie that killed us,” he said. “It sounds counterintuitive but in construction when turnover goes up profit can go down because you are caught in these fixed-price contracts.”

Originally published as Failed builder NPM Group owes $40m