Mahercorp calls in administrator but says it will survive and isn’t in liquidation

The Melbourne builder has put the brakes on its projects for more than a month but insists it hasn’t collapsed.

A property built by Mahercorp’s Urbanedge Homes.

Pressure on the construction industry has claimed another Victorian home builder with Mahercorp being placed in administration and its home-building operation put on hold for more than a month.

It comes just weeks after Porter Davis Homes went into liquidation, leaving more than 1700 incomplete homes across Victoria and Queensland, and a series of high-rise builders also collapsing.

Mahercorp on Friday called in Cor Cordis as the voluntary administrator.

It is the nation’s 22nd largest home builder and joins the ranks of construction companies which have been caught out by the volatile mix of rising costs, narrow margins and labour shortages.

Mahercorp is the parent entity of two Melbourne builders – Urbanedge Homes and Eight Homes – which specialise in construction in the city’s northern and western suburbs.

The companies had 1008 housing starts in 2021-22, putting it in Victoria’s top 10, according to HIA statistics.

In a letter to customers, Mahercorp chief executive Steve Maher said the company he established in 2002 had not collapsed nor was not in liquidation and he was working on plans to rescue the builder.

“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,” the company founder wrote, blaming external pressures for the woes.

“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.”

Mr Maher said that the company had been renegotiating trading terms with suppliers and insurers for months and their support had helped manage spiralling costs but it lost a key backer.

“Entering voluntary administration was the only option after being advised earlier this week that the insurer for our supplier of essential safety equipment would no longer support our business,” Mr Maher wrote.

He told customers that building would be put on hold for the five-week duration of the voluntary administration. But he pledged to try to save the business.

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

Cor Cordis said its appointment was limited to Mahercorp Pty Ltd and House & Land World Pty Ltd, while other entities in the group were not under administration.

“This week Mahercorp determined that it was or would shortly become insolvent due to a significant supply chain issue and made the decision to appoint voluntary administrators to restructure the business and return it to profitability,” Cor Cordis said.

Through the voluntary administration process Cor Cordis will pause construction work “whilst they urgently assess the business operations and explore all options to restructure or recapitalise the businesses, including through a deed of company arrangement”.

Cor Cordis will spend the weekend poring over the firm’s books.

“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,” it said.