Failed building firm Condev owes $31m to subbies, suppliers

Failed building giant Condev owes close to 700 creditors and other suppliers more than $30 million while its workers are owed $2.45 million following its collapse last week.

Condev building site at Main Street, Varsity Lakes. Picture: NIGEL HALLETT

Failed building giant Condev owes creditors and other suppliers more than $30m while its 107 workers are out of pocket for $2.45m.

In a report lodged with ASIC, Worrells insolvency partner Jason Bettles said unsecured and subcontractor retentions total almost $31m – owed to about 700 people and entities – while the Australian Taxation Office is owed $530,000. Secured creditor Westpac is owed about $6.3m.

Condev collapsed last week after talks with developers about a $25m cash boost broke down and the directors considered liquidation was the only option for the company.

Mr Bettles said last week had been told by Condev directors that subbies, suppliers and other trade creditors had been paid to date but he was yet to determine how much the company owed. “Because it is trading business, bills will continue to roll in,” said Mr Bettles.

Mr Bettles said that as of last Wednesday, the business had ceased trading and all ongoing construction projects were on hold until the liquidation process could establish options. Condev had more than 100 employees whose outstanding entitlements were expected to be paid in full.

Condev building site at Main Street, Varsity Lakes. Picture: NIGEL HALLETT

“Inherently the construction industry involves numerous subcontractors, suppliers, and other trades to complete its business outside of the company’s permanent employee base,” he said.

Mr Bettles said Condev directors Steve and Tracy Marais had agonised over the decision to appoint liquidators. “Their staff and contractor relationships have been at the centre of each discussion to evaluate what this decision’s impact will have on them,” he said.

Condev founders Steve and Tracey Marais sitting down with the media to discuss the collapse of their company at their Robina headquarters.

Mr and Mrs Marais fought back tears on Wednesday as they told how the collapse of the company they founded 20 years ago felt like “a funeral”.

Condev joins a growing list of builders hitting the wall amid a surge in costs due to Covid-19 and flooding events. The collapse of Condev comes only weeks after the failure of Melbourne-based Probuild with industry watchers tipping more pain is on the way.

Ms Marais said Condev had money to pay accounts for the next three months but took the “extreme” step of going into liquidation so as not to “hurt people more.”

She said she feared other big builders could be facing the same fate as Condev.

“I don’t think potentially, I think for sure,” she said.

“I won’t mention names – that would be cruel because we didn’t like hearing these things (rumours of strife) about ourselves.” Liquidators Worrells were unavailable for comment yesterday.

Russ Stephens from the Association of Professional Builders said Australia was now leading the world in building industry collapses largely because builders were tied to fixed price contracts. Mr Stephens said that unlike the US and Canada where builders could pass on rising costs to developers, Australian building companies had to absorb increases.

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He said no-one could have predicted the onslaught of Covid-19 and the more recent floods that had pushed building costs up 25 per cent.

Mr Stephens said the collapse of Condev would presage the failure of more firms in the months ahead. “It is going to get a lot worse,” said Mr Stephens. “Condev will take down a lot of suppliers and subbies.”

Condev met with developers on Monday in a last-ditch, and ultimately futile, effort to convince them they needed more cash to finish off projects.

The developers, who have contracted Condev to build 18 projects across Queensland worth up to $1bn, were told construction costs had skyrocketed 25 per cent in the past 18 months amid the impact of the Covid-19 pandemic and more recent flooding.

The collapse of Condev has now left those developers scrambling to find new builders to complete hundreds of millions of dollars worth of projects.

Macquarie York managing director Roy Skaf said it has appointed Descon Group to finish construction of their Allure apartment tower on Chevron Island on the Gold Coast.

“We had to act quickly and swiftly and find ourselves a new builder,” he said.

“They will be back on site on Wednesday 24th of March if not earlier.”

The 95 unit development is 70 per cent completed and construction is due to wrap up in October with settlement is due at the end of November.

Mr Skaf said Descon had agreed to take on all of the subcontractors on the job, pay salary entitlements and ensure all subcontractors of all of their contract entitlements.