Construction company collapses owing more than $2m after bitter feud between director and staff

A building company has collapsed after a bitter feud between the boss and senior management.

EXCLUSIVE

A building company has collapsed as liquidators investigate the transferral of hundreds of thousands of dollars of company funds to two employees.

Last week, Alurt Construction Services, based on the NSW mid-north coast near Coffs Harbour, plunged into liquidation.

The company’s initial estimated debt of around $100,000 has exploded to more than $2 million, although some amounts are disputed, according to the appointed liquidator, Scott Newton of insolvency firm Shaw Gidley.

He said that Alurt had failed because the relationship between its director and senior management had “fallen apart” and led to a “complete breakdown” in recent months.

Indeed, the working relationship between Alurt’s sole director, Jacob Robin, and its construction manager Toby McCosker, and project manager Mike Arnold, had soured drastically, with all the men claiming they were owed money.

L-R: Unknown person, Mike Arnold, Toby McCosker, Jacob Robin and another unknown person. Just months after this picture was taken, the men have had a bitter falling out.

The liquidator, Mr Newton, lodged a report to the corporate regulator about Alurt’s financial affairs which has been obtained by news.com.au.

That report claims that a senior employee, Toby McCosker, withdrew $224,500 from company funds in January this year.

This money was transferred without the consent of Alurt’s director Jacob Robin, the report stated.

Mr McCosker does not dispute that he transferred the money out, according to the document, but claims he was entitled to it due to a loan he gave to the company, and also from wages and profits that were never paid out.

The liquidator said Mr McCosker might have been entitled to share in some of the construction firm’s profit as he was a shareholder in the company.

However, he added that investigations into the loan were ongoing.

Mr McCosker has lodged a claim over his unpaid employee entitlements, which came in at a staggering $729,000.

The liquidator said he has yet to determine if this amount is correct.

News.com.au contacted Mr McCosker for comment.

At the same time, the liquidator’s report also states that the other senior employee, Mike Arnold, also owes a substantial amount of money to Alurt.

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Toby McCosker claims he is owed more than $700,000, while the company claims he transferred out more than $200,000 without the director’s consent.

The report says Mike Arnold owes the company $106,000 from personal expenses and a large payment.

Company records state that Mr Arnold owes Alurt $106,000, which he denies.

This amount “comprises a number of transactions since 1 July 2023 which appear to be personal expenditure on a company credit card,” the liquidator’s report noted.

In January this year, Mr Arnold was paid $82,500 from the company’s bank account, without the director’s consent, but claimed he was owed this in a profit sharing agreement, the report said.

The liquidator wrote that he believed there was “no valid legal basis” for Mr Arnold to take this money.

“As Mr Arnold is not a shareholder of the company, there is no valid or legal basis for him to receive dividends from the company, especially in circumstances whereby his employment contract also provides no such right to profit share,” the report stated.

“As a result, in my view the full amount of the outstanding loan is due and payable to the company.”

Mr Arnold denied that he made any transfers and said he had no access to Alurt’s bank account. He also denied that he had racked up over $20,000 on a company card.

“I was paid a small salary on the basis that there would be profits,” he told news.com.au.

He says he is owed about $100,000 and has lodged a claim with the liquidator.

“There’s nothing dodgy being done there or anything nefarious,” Mr Arnold added.

Alurt’s liquidator wrote it was unlikely he would be able to recover the money from Mr Arnold.

“Mr Arnold remains an undischarged bankrupt, having been made bankrupt in May 2014 and as such the likelihood of recovery of the amount may prove very difficult,” Mr Newton said in his report.

There is no suggestion that there was any wrongdoing on the part of Mr McCosker or Mr Arnold.

The Nambucca Heads RSL is unhappy with the work Alurt has done on their premises.

The RSL has claimed $1.5 million in money owed to them.

The collapse of Alurt Construction Services has led to a small number of creditors left more than $2 million out of pocket.

The Nambucca Heads RSL is the largest creditor. In a proof of debt form, the pub claims to be owed $1,534,850, mostly due to defective work.

The club was supposed to receive important upgrades to “strengthen” its capabilities so it could act as the region’s emergency evacuation centre but claims the work carried out has actually left it more out of pocket.

Nambucca Heads RSL Club was awarded a $2.07 million grant from the federal government following the 2019/2020 black summer bushfires to undergo significant work on its roof, as well as adding solar panels and energy efficient airconditioning. The business also chipped in a further $500,000 for the renovations.

But the CEO of the RSL club, Wendy Mills, claimed to news.com.au that the roof works carried out by Alurt has left them with issues in need of fixing.

Alurt’s other debts come from trade creditors, employee entitlements, the ATO and also loan obligations on its 18 vehicles which are under finance, as well as the more than $700,000 loan claim from Mr McCosker.

Alurt was previously in administration before it went into liquidation.

All staff had quit prior to the administrator’s appointment.

A text Mr McCosker allegedly sent to an employee in 2019, when he was directing his own company.

Both Mr Arnold and Mr McCosker have both previously been the subject of reporting by news.com.au.

Just two days before Alurt went into administration, news.com.au had released another article about Mr McCosker.

The article outlined how Mr McCosker was the sole director of NSW-based electrical and mechanical services company Vallec, which, alongside two affiliated businesses, went into liquidation with cumulative debts of more than $7 million in 2019.

Another employee, Charles*, who was working as a project manager at Vallec, resigned two months before the company went bust.

But when he quit, he says he received a shocking text from the sole director and part-owner of the company, Mr McCosker.

“My last message to you is you are a f**king b*tch that can not (sic) deliver nothing but a box of farts you price (sic) of sh*t,” the message allegedly read.

“Any f**king day of the week you w*g c***.”

In response to allegations about the text message, Mr McCosker previously said to news.com.au, “One side of the story is always just one side of the story” and that there was important context.

Mike Arnold sitting on the steps of a Sydney rental property that was not paid for.

Mike Arnold smoking while wearing a welding mask, earning him the nickname Dart Vader.

Mr Arnold has also landed in hot water for his past business dealings.

As Alurt’s liquidator noted, Mr Arnold has been bankrupt for the past 10 years and he has also been banned from running his own company.

Despite this, last year he was accused of possibly operating as a “shadow director” as he was working for another construction business that went bust.

Mr Arnold’s wife Kathryn was the director of collapsed building firm Workspace One, which went into liquidation last year in Sydney with liabilities of $845,000.

ASIC records show that the liquidator of this company, Liam Bailey accused the building firm’s sole director, Kathryn Arnold, of pocketing $861,000 in company money prior to its collapse – more than the sum total the business owed to creditors.

He also noted there were suggestions her bankrupt husband Mr Arnold could have been operating as a “potential” shadow director.

Ms Arnold previously admitted to news.com.au she transferred money to a personal account to pay and reimburse herself for business costs and did not dispute the amount.

But she denied that her husband was a shadow director and said such suggestions amounted to gender assumptions.

Mike Arnold’s wife Kathryn directed a building company last year which collapsed, and which Mike worked for.

Kathryn Arnold pleaded guilty to failing to comply with her duties as a director.

“Unfortunately there are not many women in the construction industry and many of the trades and even clients failed to acknowledge me as the director of the business or take my position seriously,” Ms Arnold previously said to newscom.au in response to accusations about her husband.

“Whilst the project manager is indeed my husband, his role was to manage the day to day operations of the project and he acted only in this capacity.”

Mr Arnold also denied he had ever been a shadow director.

News.com.au spoke to the landlord of the Arnolds’ Sydney home, Gino Moscaritolo. He is owed $12,000 from unpaid rent, according to orders made by the NSW Civil and Administrative Tribunal. Only Ms Arnold was signed onto the lease.

To date, the money has not been paid back and they left to move to the NSW Mid North Coast.

ASIC filed civil offence proceedings last year against Ms Arnold for her failure to comply with her duties as a company director as she did not provide the liquidator with key information.

During Mr Bailey’s investigation, he said the books and records of Ms Arnold’s had been so “poorly maintained” that there were 1,851 unreconciled transactions dating back to the company’s very beginning in what he called “abysmal”.

In February, Ms Arnold entered a guilty plea to both counts of a director/secretary not make out statement of company affairs and officer not deliver books to liquidator.

She was fined $500 for the first offence, and $1000 for the second, while a conviction was also recorded.

The liquidator, Mr Bailey, told news.com.au since the guilty pleas, he has received a “small parcel of documents” from Ms Arnold but it was in his view that “nothing like what would be required to comply with the legislation”.

“Otherwise, not much co-operation at all,” he added.

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Originally published as Construction company collapses owing more than $2m after bitter feud between director and staff