Sydney building company JCG Constructions in administration with almost $15m debts amid claims of building defects
The owners of a 44-unit apartment complex are among the unhappy customers of an embattled Sydney building company which has collapsed under a pile of debt.
NSW
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An embattled Sydney construction company has gone into voluntary administration after being hit with a potential $11.9 million in claims for alleged defects in an apartment building.
Family owned business J & CG Constructions started in 1994 and it worked on multistorey apartments, offices, retail and commercial spaces.
But in recent years, the owners from multiple residential projects have made claims for alleged building defects, according to documents lodged with ASIC.
J & CG Constructions went into administration in May amid proceedings in the NSW Supreme Court and the NSW Civil and Administrative Tribunal.
It owed about $14.9 million to unsecured creditors, mostly from claims related to alleged construction defects, according to the documents lodged with ASIC on Friday.
Sole director and shareholder Mark Guerreiro told administrators the company’s failure was due to the financial impact of the claims.
“The director considered that the scale of the claims, along with the legal costs expected to defend them, exceeded the company’s financial capacity and rendered the business no longer viable,” the administrators’ report said.
The largest of the defect claims related to the Rising Apartments in Mascot, on Botany Road, with combined claims of $11.9 million.
The site, which was completed in October 2017, comprised 44 apartments and four commercial lots.
The owners commissioned an inspection in 2019, which found “potentially major defects related to the rooftop waterproofing”, along with multiple other minor defects, the report said.
The matter is still subject to proceedings in the NSW Supreme Court.
The administrators noted the defects claim was likely to render the company insolvent.
The owners of another apartment building built by J & CG Constructions in Leichhardt commenced proceedings in the NSW Civil and Administrative Tribunal in December.
The building on Norton Street had 15 apartments and two commercial lots, and the owners issued a defect report in 2023. The owners have claimed they’re owed $606,820.
So far, the estimated debts for alleged defects come to $12.9 million, but the total across the multiple claims are yet to be determined, said the report from administrators Sean Wengel and Rashynl Prasad of William Buck.
They said the complexity of the claims made it “difficult at this stage” to know if they would hold up as valid unsecured debts.
J & CG Constructions was also only one of multiple companies operating under the J + CG brand, the report said.
It was historically the principal trading entity of the group, employing all staff, owning all equipment and taking on the majority of the contracts.
Mr Guerreiro was also a director of J & CG Con, J & CG Group and J & CG Fitouts.
He told administrators J & CG Constructions did not enter new building projects in the 2024 or 2025 financial years, instead focusing on existing contracts and addressing defect claims covered by warranties. He also said there was ongoing financial strain from COVID-19.
As a result, its total income halved from $15.4 million in the 2023 financial year, to $7.7 million the next year, eventually dropping further to just $581,000 in the 2025 financial year.
It had also reportedly run into other unexpected costs, including $550,000 in fines and legal costs for a safe work incident and about $250,000 lost from an invoice fraud case.
In the 2025 financial year, it generated a $704,000 loss, following on from a $1.9 million loss in the previous year.
“The company remained able to trade and meet obligations prior to this period only because the director personally funded working capital needs,” the report said.
However, the potential $11.9 million defect claim would “place the company into an insolvent position he could no longer support,” it said.
In March, J & CG Constructions transferred all assets and employees to J & CG Projx.
The administrators said there were no indicators of phoenix activity and the corporate structure appeared “typical for construction industry operations”.
The report also said the company likely became insolvent in April.
Creditors will decide in a meeting next week if the company should be liquidated, but the administrators have advised them against it.
Instead, they could agree to sharing from a pooled fund under a deed of company arrangement.
The deed would require Mr Guerreiro to contribute $100,000 to the fund and control of the company would remain with administrators.
Creditors would be expected to receive 0.68 cents per dollar owed, compared to zero to limited returns if the company were liquidated.
News Corp has contacted Mr Guerreiro and the group brand J + CG Construction for comment.
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Originally published as Sydney building company JCG Constructions in administration with almost $15m debts amid claims of building defects
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