Multi-Res Builders Pty Ltd: Company grew 350 per cent in revenue in year before collapse
A collapsed Tasmanian construction company which left dozens of homes unfinished exploded in revenue by 350 per cent in the year before its demise - a level of growth its liquidator deemed unsustainable. Find out why.
Tasmania
Don't miss out on the headlines from Tasmania. Followed categories will be added to My News.
A collapsed Tasmanian construction company which left dozens of homes unfinished exploded in revenue by 350 per cent in the year before its demise – a level of growth its liquidator deemed unsustainable.
Multi-Res Builders Pty Ltd, owned and directed by businessman Colin Barratt, entered liquidation on May 14 this year and left more than 20 homes including a $7.3m Homes Tasmania project unfinished.
In his latest report to creditors liquidator David Levi noted Multi-Res’ revenue had grown from $3.7m in the 2021 financial year, to $17.1m the next – an increase of 350 per cent.
This leap in revenue, Mr Levi in his report noted, was marred by unsatisfactory systems and infrastructure “financial or non-financial” to manage and control the company’s growth.
“The mistakes included the convergence of high gearing, overtrading, and the big project/s,” the report stated.
It listed 176 unsecured unrelated creditors including suppliers, contractors and the Australian Taxation Office as estimated to be owed a total of more than $4.3m.
The company’s total liabilities sit at more than $6.219m – according to extracts from Multi-Res’ Xero records.
The records, it was noted, had not been reconciled since at least June 2022.
The list of suppliers, which spanned four pages of the report, included estimated owings to Bunnings Trade at $64,529, Clennett’s Mitre 10 at $335,482 and Limcora Plumbing and Drainage at $110,441.
Several Tasmanian councils are also said to be owed varying amounts including an estimated $32k for Brighton Council, $8,979 for Glenorchy City Council, $6,471 for Hobart City Council, $1249 for Clarence City Council and $850 for Derwent Valley Council.
Mr Barratt in providing an answer for the report as to the cause of the company’s failure stated the “mayhem” of the pandemic had caused an increase in material and labour costs, and delays in access to materials.
“Most jobs were priced prior to the pandemic but Multi-Res had fixed price contracts prior to the pandemic, which caused a roll-on effect including higher material cost and labour cost which caused cashflow problems,” Mr Barratt stated.
It is estimated Multi-Res owes more than $2.5m to related companies and creditors, which include companies owned by other members of the Barratt family - including $1.2m to All Carpentry (Tas) Pty Ltd - owned by Mr Barratt’s son, Tom.
“The books of Multi-Res Builders Pty Ltd indicate a co-mingling of funds in order to service cash flow,” the report stated.
Other family members and business included as being owed by Multi-Res included Mr Barratt’s wife, Deborah, All Scaffolding (Tas) Pty Ltd, Barratt Masonry Pty Ltd and Mr Barratt himself.
The report also stated Multi-Res was “balance sheet insolvent” and “cashflow insolvent” from September 30, 2022, “if not earlier”.
“Had Multi-Res ceased trading, and ceased incurring liabilities at or around [September 30, 2022], then creditors would now be in a better financial position,” the report stated.
It noted there had not been a ‘significant reduction” in creditors’ liabilities since then, and that available cashflow had been used to pay day-to day expenses for the company.
In the report it was noted Mr Barratt sat at the helm of five other companies including: Boyer Road Pty Ltd, 31 O’Brien Street Pty Ltd, 3 Hackett Street Pty Ltd, and 34A Carnegie Street Pty Ltd – each of which related to an address where works were conducted by Multi-Res.
The report stated there was no known legal or equitable interest by Multi-Res in the developments other than to be retained as a builder – and Mr Levi was unable to determine from the company’s records if the building works were profitable or unprofitable.
“Multi-Res incurred liabilities to suppliers for labour and materials for works conducted by Multi-Res at those sites … Creditors of Multi-Res as at May 14 2023 include amounts owing to suppliers in relation to works conducted at those sites,” it stated.
“No evidence has emerged that the structure was established to defeat creditors.”
ASIC insolvency statistics stated failures or appointments of external administrators in the construction industry represented 919 matters nationally between July 1, 2021 and June 30, 2022.
The Mercury has approached the Barratts for comment.
katie.hall@news.com.au
Stabbing friend in the neck results in jail time
A walk home from the pub soured for one pair after one of them stabbed the other in the neck, resulting in jail time for the attacker.
Leading harness racing trainer hit with ban for horse mistreatment
Prominent Tasmanian harness racing trainer, Ben Yole, has had his industry licence disqualified for three years after a panel of stewards found horses had been “systematically” mistreated at his stables.