Christmas blow as contractor collapses putting 200 out of work

A major Queensland civil contractor has collapsed owing more than $30m and putting 200 employees out of work just weeks out from Christmas.

Staff at Vac Group in Rockhampton were given redundancy notices this week.

• Full list: Qld’s latest company collapses

A major Queensland civil contractor has collapsed owing more than $30m and putting 200 employees out of work just weeks out from Christmas.

Yatala-based VAC Group that provides excavation work and mapping services for major construction projects has fallen over after a combination of wet weather and pandemic lockdowns hit its bottom line.

Staff were informed on Monday they no longer had jobs, only two years after the group emerged from an earlier administration owing creditors more than $9m.

Stephen Earel, Neil Cussen and Michael Hird of Cor Cordis were appointed voluntary administrators earlier this week of various companies in the group including Vac Group Holdings, Vac Group Operations and Beacos

Based in Yatala, the group claims to operate the largest fleet of vacuum excavation suckers trucks in Australia and other underground asset location and mapping services for small business projects, civil and building works for government and major infrastructure projects. It also operated sites in Rockhampton, Gladstone, Sydney, Melbourne and Adelaide.

It is believed Cor Cordis were bought in to consider a recapitalisation strategy for the group through a deed of company arrangement.

Some offers were made but ultimately the major creditor, a US fund controlled by global private investment firm Balbec, withdrew their support.

Cor Cordis worked with McGrath Nicol to find a better alternative than a shutdown but when that failed to materialise the premises were closed and employees made redundant.

The workers are protected under the government guarantee scheme but it is not certain they will get their full entitlements from the sale of the assets of the company. The company owes well over $30m, including to workers, lenders and the Australian Taxation Office.

The business was heavily impacted by the NSW and Victoria pandemic lockdowns and the weather. The firm had come out of its earlier voluntary administration through a deed of company arrangement with a clean slate just before Covid-19 hit. The company’s assets include a large fleet of trucks.

According to documents lodged with the Australian Securities and Investments Commission, VAC Group collapsed in 2019 owing creditors $9.2m. The firm managed to emerge from that administration under a deed of company arrangement that involved a $2m recapitalisation.

A team of about 15 staff at the company’s Rockhampton depot began work as normal at 7am on Monday but were called into a meeting after lunch and given the news. The site was quiet on Tuesday morning with all of the gates locked and no vehicles visible.

A letter was given to the employees, effective immediately, advising them their “employment with Vac Group will come to an end on the grounds of redundancy”.

It is understood staff at other sites also had a similar meeting. All staff were ordered to return any company property including laptops, phones, company credit cards, vehicles and keys.

It is not known when the employees will receive their redundancy payouts and money owed, if before Christmas.

“A redundancy letter confirming your employment entitlements as at the date of the receivers and managers appointment will be provided to you separately,” the employee letter read.

Administrators from McGrathNicol were appointed in November 2019 and continued to trade the business while they looked at refinancing and recapitalisation. A notice to cease this external administration was filed on May 12, 2020.

The VAC Group administration comes the same week Perth-based Clough Group went into voluntary administration because a crucial $350 million merger deal fell through.