Felmeri Group directors in last ditch bid to save company from liquidation
A mystery builder would complete unfinished homes left in limbo following the collapse of construction firm Felmeri Group as part of a last-ditch rescue plan.
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A mystery building company would complete most of the unfinished homes left in limbo following the collapse of construction company Felmeri Group, as part of a last-ditch rescue plan being pitched by the company’s directors.
Director Frank Felmeri junior has requested that administrators adjourn a meeting set down for Monday – where creditors had been expected to wind up the company – in order to give him more time to finalise the proposal.
Mr Felmeri claims the deed of company arrangement (DOCA) proposal has the support of a “large national building company”, which would complete construction of most of the unfinished homes.
The identity of the potential white knight is not disclosed in correspondence between Mr Felmeri’s lawyers, administrators and creditors of the company, but it is described as having expertise in commercial and residential construction.
In a letter from Mr Felmeri’s lawyers to administrators requesting Monday’s adjournment, they say the proposal would likely involve an upfront payment to creditors, excluding those related to the company’s directors.
Insurer QBE would be reimbursed for building indemnity insurance payments already made, but certain non-profitable projects would not be taken on by the new builder.
“The DOCA Builder requires additional time in which to undertake necessary due diligence prior to finalising a proposal,” the letter from Mr Felmeri’s lawyers says.
“Following the conclusion of due diligence, if a DOCA proposal is made on the above terms, from my review of the administrator’s report to creditors dated 16 June 2023, it appears that the return to creditors will be higher pursuant to the DOCA proposal than in liquidation.”
Administrator Leigh Prior, of Agile Business Advisory, has written to creditors notifying them of Mr Felmeri’s request for a three-week adjournment, which would allow administrators to review and consider the terms of the proposal before issuing a recommendation to creditors.
He said an adjournment could be in the best interests of creditors, but a final decision would be made at Monday’s meeting.
“Based on the information available to me, a DOCA proposal may provide a better return to unrelated creditors and, accordingly, it may be in the interests of creditors that the meeting be adjourned,” he says in a letter to creditors.
“The DOCA Builder has requested that, at this stage, its identity is not disclosed. I have been informed by the solicitor for Mr Felmeri Jr that the DOCA Builder is not related to the company or its directors, has the capacity to fund and effectuate a DOCA and has a reputation which would instil confidence in owners.”
If a deed of company arrangement is approved by creditors, control of the company would return to its directors, the father-son duo who are both named Frank Felmeri.
Felmeri Group, which traded as Felmeri Homes and Felmbuilt Commercial, fell into administration on May 19, following a string of complaints around claims of poor workmanship and lengthy delays that prompted an investigation by CBS.
About 120 customers were affected, either left with unfinished homes, or having contracts for building projects yet to commence.
While the company’s debts currently stand at close to $10m, including about $7m to unrelated parties, Mr Prior has previously warned that number could reach up to $20m as the fallout for customers is fully worked through with insurer QBE.
Mr Felmeri did not return calls.
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Originally published as Felmeri Group directors in last ditch bid to save company from liquidation
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