Jett Building and Construction liquidation: Statutory report details why firm went bust

A new report on the liquidation of a Yeppoon construction company says it wasn’t paid for a number of variations on a major military project. But that was just one of the problems that has left 99 creditors owed more than $3 million.

Jett Building and Construction says its liquidation was because of not being paid for works on the Shoalwater Bay Training Area expansion project.

Poor bookkeeping, rising materials costs, underestimations and defects on projects have been reported to be some of the issues behind the liquidation of Yeppoon company Jett Building and Construction (JBC).

These financial troubles may have dated back as early as October – almost 12 months before they filed liquidation.

At the time of the liquidation, JBC had been contracted by Woollams for the Rockhampton Museum of Art and drug rehab centre projects, Gladstone Water Board for a fish hatchery, Lawrie Builders for works at Parkhurst State School and CPB Contractors for the Capricornia Correctional Centre expansion.

A new statutory report was filed with the Australian Security and Investments Commission (ASIC) on December 23, 2021, detailing the extent of the liquidation.

JBC was incorporated on July 4, 2016 with Brett Dixon as director and primarily traded from premises at 41 Arthur Street, Yeppoon.

Jett Building and Construction offices in Yeppoon.

The company went into liquidation on September 27, 2021, and ceased trading the same day, with Morgan Lane and Michael Beck from Worrells Solvency and Forensic Accountants appointed as liquidators.

Mr Dixon advised the liquidators the company had begun to experience financial difficulty about nine months before the liquidation when it failed to receive payment on a major contract, namely the Shoalwater Bay Training Area remediation project.

The statutory report details the company owes $234,917 in employee wages, superannuation, leave and redundancy payments.

There are 99 remaining unsecured creditors who are owed a total of $3.145 million and two secured creditors, owed $260,945.

According to the statutory report, JBC was owed $1.25 million in outstanding invoices, of which Worrells have been able to recover $28,492.39.

On the initial date of the liquidation, the liquidators from Worrells and an agent attended premises in Rockhampton and Yeppoon, and access to sites at the prison and Shoalwater Bay was arranged, to take an inventory of the company’s assets.

The majority of the items have been sold at auction with a gross sale of $108,041, with the net sale proceeds being $72,361.87, after agents commission, valuation fee, transport, collection costs and GST.

The company also owned two trucks and one excavator that have also been sold with the net sale proceeds of $171,766.73. These funds were paid to NAB, as they held a security interest over the assets.

Some of the details of outstanding debts, invoices and retentions have been difficult to trace as the company did not keep sufficient records.

The company director supplied a list of outstanding invoices however upon the liquidator’s investigations, multiple companies supplied evidence they had paid the invoice.

The statutory report notes the company failed to maintain proper books and records under the Commonwealth Corporations Act 2001.

The liquidators believe the company may have become insolvent as early as October.

This is backed up by the fact the company’s internal accounts recorded monthly losses from March 2020 to November 2020 totalling about $1.1 million.

It is also noted a significant increase in labour and material costs that was reported in October 2020 which led to the monthly losses.

The company’s payable balances went from $530,000 in September 2020 to exceeding $1 million in November 2020, and a net current deficiency was recorded from October 2020 onwards.

Correspondence in regards to the fish hatchery states the final invoice of $25,618.90 had not been paid as the company had failed to rectify a number of defects on the projects.

JBC was owed about $40,000 for works on the prison project, however CPB had withheld the money as the works were not fully completed by the time of the liquidation and they had to pay for costs to complete the works, fix defects and remove JBC’s storage containers from the site. In turn, JBC now owes CPB Contractors $146,062.68 for these works.

In regards to the Shoalwater Bay remediation works, JBC reported at the time of the liquidation they were owed about $2.5 million from Downer FKG, and that this lack of payment was the main reason behind their file for liquidation.

The statutory report notes JBC were contracted by Downer and FKG for the Australian Government’s Defence Shoalwater Bay Training Area remediation project and were successful in two major works subcontracts.

The concrete package had an original amounts of $5.4 million and the carpentry package was for $1.2 million.

The concrete package had approved variations of $1,083,868.50 and unapproved variations of $1,245,262.84.

The carpentry package had approved variations of $16,562.11 and unapproved variations of $182,972.61.

The concrete variations were in relation to two additional ablution block foundations, which were estimated to cost an extra $236, 563.26.

The report states JBC allowed for the foundation of one ablution facility in their tender however in the final contract, foundations were required for three.

JBC alleges there was a “misrepresentation in the tender documents and contends that it was a singular block, not multiple, and it was not noted until the contract and scope had been signed and works underway”.

The liquidators wrote there appears to be some evidence asserting the truth of this and they are investigating.

DFKG rejected the variation in August on the basis it was not submitted within the correct time frame, JBC had no entitlement to the additional payment and their contract had been terminated.

The variation was under review by DFKG for four months and liquidators are investigating if DFKG delayed rejecting the variation to keep JBC undertaking works on the project for as long as possible.

JBC also submitted a variation of $221,587.76 for additional daily travel and accommodation facilities from April 2021 as the on-site accommodation which DFKG provided under the contract were closed.

A variation related to increase in labour, materials and costs as well as an extension of time as a result of the Covid-19 pandemic was requested for $696,430.81.

Both the travel and Covid-19 relief variations were rejected by DFKG for the same reasons as the concrete works.

The liquidators are investigating if the company was rightfully entitled to these payments.

Originally published as Jett Building and Construction liquidation: Statutory report details why firm went bust