Cross Laminated Offsite Solutions owes $5.2m to unsecured creditors

The state government awarded a Geelong company a huge sum of money despite suspicions it was insolvent at the time, documents reveal.

John Fitzgibbon founded Cross Laminated Offsite Solutions.

The state government awarded a Geelong company a grant of almost $900,000 despite suspicions it was insolvent at the time, documents reveal.

Cross Laminated Offsite Solutions (CLOS) received the taxpayer funding in November last year as part of Labor’s circular business support fund, but an investigation has since found the North Geelong-based business might have traded while insolvent from late September.

An investigation into CLOS’s finances commenced after it entered administration in late May due to what sole director and majority owner John Fitzgibbon said was a major cash crunch.

It has since emerged that the business owes $5.2m to unsecured creditors.

David Holton, from insolvency firm Rodgers Reidy, said creditors last week voted to give control of the business to an entity that was registered on June 21.

That company – CLOS Build Pty Ltd – has Christopher Burrell listed as the sole director and secretary, but Mr Fitzgibbon as the major shareholder, according to Australian Security and Investment Commission (ASIC) documents.

Mr Holton said creditors reached an agreement that would hopefully see the majority of the company’s 45 employees remain in a job.

He said unsecured creditors would receive a return of up to 10 cents in the dollar.

CLOS operates out of the old Ford site, now known as Fortek.

It builds multi-use modulars which are used for housing, day spa and Airbnb cabins and temporary accommodation.

Exterior shots of Cross Laminated Offsite Solutions on Melbourne Rd. Picture: Alan Barber

Shane Cremin, also of Rodgers Reidy, said the potential insolvency could see Mr Fitzgibbon be liable for debts CLOS incurred from September 30 last year.

“(These debts) remain unpaid as at the date of our appointment,” Mr Cremin said in a report filed with ASIC.

“However, it would appear that the director and the shareholder (Mr Fitzgibbon) may not have sufficient net assets to satisfy any successful insolvent trading claim awarded against them.”

According to the report, there was no evidence that suggested Mr Fitzgibbon breached his duty to act in good faith, nor used his position or any information improperly.

Minister for Environment Steve Dimopoulos and Geelong MP Christine Couzens spruiked the $878,000 CLOS grant in a November media release.

That money was to expand and upgrade its facility to build affordable homes.

The company also received a $150,000 grant in 2022 to share how their innovative prefabrication of housing components was faster, cheaper and cuts waste.

Corio MP Richard Marles and state Lara MP Ella George visited the facility in February.

A state government spokesman said the full payment of the $878,000 grant was dependent on CLOS achieving key milestones.

It has so far met three of six milestones.

It remains unclear how much money has been handed over to this point.

The government maintained rigorous” due diligence was conducted, including financial checks, before a contract was entered into with CLOS.

Mr Fitzgibbon attributed the failure of CLOS to a number of causes according to the administrator’s report, including a number of deals that fell through late in the piece.

Upon entering administration, Mr Fitzgibbon said the business had in excess of $12m worth of projects in the pipeline.

Originally published as Cross Laminated Offsite Solutions owes $5.2m to unsecured creditors