Melbourne builder’s $12m collapse impacts 62 homes

A whopping 401 creditors and 23 staff have been left in the lurch after the company suddenly collapsed.

A whopping 401 creditors are unlikely to receive a cent of their lost money from a collapsed building firm unless the liquidator can find a “pot of gold” buried among the company’s limited assets.

In January, Melbourne-based residential builder Hallbury Homes went into voluntary administration.

The firm owed between $8 million and $12 million to hundreds of creditors, including 62 homeowners with projects at various stages of completion.

Last week, at a creditor’s meeting for Hallbury Homes, which also traded as Hallbuild Pty Ltd, the company was wound up in liquidation.

Appointed liquidator Michael Caspaney from insolvency firm Menzies Advisory, who was previously the appointed administrator, said the builder was bleeding money in the months leading up to its demise.

“In the last 18 months, it appears that they lost between two and $3 million,” Mr Caspaney told news.com.au.

“When you’re losing money like that, I reckon they were insolvent during the 2022 calendar year, probably early on.”

According to a report lodged with ASIC on February 2, Hallbury Homes was “most likely” insolvent for the “whole” year of 2022.

The construction firm went into liquidation last week.

The implosion of Hallbury Homes has left behind 62 devastated customers building residential homes with the construction firm.

Of those 62, 42 had already commenced building.

A further 20 were in the pipeline to begin construction work.

In another devastating twist, 10 of those customers had already paid a five per cent deposit to the builder.

Only three of them had homeowners warranty insurance. That means the other seven customers are unsecured creditors. Their losses will not be covered by the state insurer and the only chance of getting their deposit back will be if a dividend is paid out.

But that’s incredibly unlikely, according to Mr Caspaney.

“My prediction is there’s not going to be a dividend,” he said.

“I think there could be recoveries to cover employee entitlements (but) unless I find a pot of gold there’s not going to be any for creditors.”

The ATO is the largest creditor, owed $1.4 million.

The biggest trade creditors are owed as much as $300,000.

One of the homeowners paid a $78,000 deposit and another has put in a claim for $1 million worth of losses due to the firm’s sudden collapse.

Hallbury Homes is now listed on Google as “permanently closed”.

All 23 staff members at Hallbury Homes were also all sacked on the spot the day they returned from their Christmas break on January 9.

“When I first got there they were all on holidays,” Mr Caspaney said.

He broke the news to them in a staff meeting but said there were no tears.

“I think when employees are in a business like that, I’ll put it this way, they probably weren’t surprised, they had been living with those problems,” he added.

“The turnover was noticeable, quite a number of them had only started in the last six months.”

Hallbury Homes had two directors, one of whom has declared bankruptcy, according to Mr Caspaney.

The other director is currently in the process of considering to declare himself bankrupt, he added.

The directors reportedly used some of their own money to prop up the company before it collapsed.

The entire construction industry is in crisis.

The construction industry has been struggling as many companies are facing financial ruin and unable to turn a profit because of current market rates.

In the past month, award-winning residential construction company Delco Building Group in Victoria went under owing $780,000 to 50 creditors.

On Monday, news.com.au reported that major NSW apartment developer EQ Constructions had gone bust owing at least $40 to $50 million.

Then on Tuesday, a Perth building company called Hamlen Homes collapsed into administration with $1.4 million reportedly owed to creditors.

It also emerged in January that two more construction companies in Western Australia went under due to labour shortages and increasing construction costs.

A number of large firms entered into insolvency over the past year including Probuild, Condev Construction, Pivotal Homes, Waterford Homes, Privium, Home Innovation Builders and Norris Construction Group.

It was caused by a perfect storm of supply chain disruptions, skilled labour shortages, skyrocketing costs of materials and logistics, and extreme weather events.

Originally published as Melbourne builder’s $12m collapse impacts 62 homes