Victorian home builder Mahercorp likely to sack dozens of employees to save company

Numerous employees could be sacked from the Victorian construction company now that it’s in voluntary administration after struggling to handle spiralling costs.

Administrators are likely to sack dozens of employees at Mahercorp in a bid to save the company from going under, a source close to the company has told the Sunday Herald Sun.

The staff are expected to be called into meetings early this week where administrators will detail their plans to restructure the company in an attempt to stop it folding.

Mahercorp entered voluntary administration on Friday and its senior management has spent the weekend meeting with administrators with Cor Cordis.

About 730 homes are affected but all of them are believed to be insured.

It is the parent company for two prominent builders, Urbanedge and Eight Homes, and a significant share of its work is based out of Melbourne’s northern and western suburbs.

In a letter to customers, chief executive Steve Maher said the business had made the decision to enter administration with a heavy heart.

“From the outset, I want to emphasise that Mahercorp has not collapsed and is not in liquidation,” he said.

“My intention is to work with the administrator on a plan that I hope allows us to restructure the business, creating a more sustainable footing and to complete your home.

“It’s no secret that all builders are facing unprecedented challenges right now. Building costs are skyrocketing — materials and labour costs are at record levels and rising inflation is putting huge pressure on builders.

“To ease the strain of these cost increases, for some months now we have been renegotiating our trading terms with our suppliers and insurers. Their support to date has helped us manage spiralling costs.”

Mahercorp has told hundreds of its customers that it would enter into voluntary administration as it grapples with spiralling costs. Picture: iStock

But Mr Maher said entering voluntary administration was the only option after being told a key insurer would no longer support the business.

“I understand this is disappointing news for you, and I want to give you an explanation about why this is happening and tell you myself what it means for your home,” he said.

“Preparation of your new home to go to site will be put on hold for the five-week duration of the voluntary administration. Any appointments, including contract, electrical or colours, that you have booked during this period will also be on hold.

“Let me assure you again that I intend to work closely with the administrators on a plan to get the business back on track.”

One of Cor Cordis’s first moves was to hire security contractors to patrol housing estates where it has unfinished homes, in a bid to prevent the widespread vandalism and arson attacks following the collapse of fellow building company Porter Davis.

Those attacks were suspected to be the work of subcontractors who had been left out of pocket.

Administrators are expected to be formally notified in coming days of a debts Mahercorp owes its creditors.

Mahercorp recently sacked around 30 staff, meaning any additional job loses will leave it gutted.

Mahercorp recently sacked around 30 staff, meaning any additional job loses will live it gutted.

Many customer who spoke to the Sunday Herald Sun said they found out Mahercorp had gone into liquidation in the news, and are yet to receive any official correspondence from the company or its administrators.

One customer Jenks Sakir, said he was living an “absolute nightmare” and claims he was “misled through the whole process”, with a string of costly delays.

“We have been through hell,” he said.

“We should have walked away from the start.”

He said customers got more information from news outlets and each other than the company and thought it would be a “miracle” if the company was saved from going under.

He said there had been warning signs for weeks that the company was in strife.

“Two weeks before they went into administration … I said that to my mum ‘something isn’t right here’.”

Mr Sakir’s site supervisor was among the recent staff terminated.

He said a social media post from the company saying it was “in a good position” triggered alarm bells among wary customers.

Mr Sakir said he regarded himself as “one of the lucky ones” with just shy of $4000 at stake if the builder went into administration.

He said some fellow customers feared losing everything they have worked for.

“At the end of the day we as consumers shouldn’t have to lose our money for an inefficiently run business,” he said.

In a statement Cor Cordis, they said they would pause construction works while they urgent assess the business’s operations.

“We’ve commenced an urgent review of Mahercorp’s financial position and have held preliminary discussions with senior management regarding a proposal to restructure the business,” they said.

“We’ve set up a direct phone line and email address for customers, employees, and creditors.

“We will be providing regular updates to all stakeholders as we work through the voluntary administration process.”

Those wanting to get in touch can email [e-mail] or call 03 8320 5656.

Mahercorp was contacted for comment.

Originally published as Victorian home builder Mahercorp likely to sack dozens of employees to save company