Adelaide builder Stride Construction blames $4.4m collapse on legal action over ‘defective’ concrete

The builder’s $4.4m collapse has been blamed on a perfect storm of problems, with the company’s founder explaining why he purchased a sports car with company funds.

A shoddy concrete debacle and $1.4m in missing payments played a role in the collapse of a South Australian builder, as its founder explained why he bought a Ferrari with company cash.

Stride Construction ceased trading in August, owing more than $4.4m to creditors including $806k in tax.

Managing director David Angus said its woes were “not due to mismanagement … nor negligence” but “systematic challenges” facing the building sector.

In a liquidator’s report lodged on November 8, Stuart Otway of SV Partners said Stride had likely been insolvent since September 2023, although directors injected $536k in rescue funds since August that year.

Stride Construction's former office at Warradale after its closure in August. Picture: Supplied

Mr Otway said Stride suffered “significant cash flow problems arising from non-payment on contracts” and “long running legal action with a contractor who provided [allegedly] defective concrete”.

Creditors raised concerns about a sports car purchased with company funds, but Mr Angus said the Ferrari was a write-off and “we thought that we could restore the vehicle at a profit to benefit the business”.

“Unfortunately, this was not the case, but we ensured any company expenditure was returned to Stride and the vehicle has now been sold,” he said.

Upgrades worth $1.2m to the Hope Valley Sporting Club at Tea Tree Gully were part of Stride’s uncompleted projects. Picture: Tea Tree Gully Council

He revealed his company spent at least $350k on litigation against a subcontractor that installed what they claimed was “dangerously weak” concrete, which Stride fixed at its own expense.

Additionally, an interstate developer allegedly failed to pay the builder $1.4m for finished work, having first legally wound up as a ‘special purpose vehicle’.

“After my seven years of running the business, there is no question that there is little protection for builders and subcontractors with respect to unpaid debts,” Mr Angus said.

“Sadly, when builders are not paid by their often larger clients, a domino effect occurs with other small businesses such as our subcontractors being impacted.

“Disappointingly, recovery against these businesses is often difficult and always time consuming, as typically the business has complex entity structures.”

Mr Otway said Mr Angus and former directors potentially failed to discharge their directors’ duties, including acting with due care and diligence.

Further investigations are underway into the accuracy of Stride’s loan accounts, which included $101k against Mr Angus’s name and former director Keith Wood.

Specialist Contractors Association executive director Larry Moore said subcontractors enjoyed little certainty when it came to being paid.

He said one solution was to quarantine builders’ funds into a statutory trust, to ensure money owed to workers was not used for other projects.

“What happens is that a builder will get funds for a project, it’s in their bank account, but they will use that capital to fund other projects,” he said.

“It’s a massive, massive risk because all you need is one thing to go wrong.”

1280 building companies have gone insolvent this financial year to date, compared to 1040 this time last year, according to ASIC data.

Originally published as Adelaide builder Stride Construction blames $4.4m collapse on legal action over ‘defective’ concrete