Nicheliving directors in $2.7m cash splash to keep company

The directors of embattled builder Nicheliving have offered to hand over more than $2.7 million in a bid to retain control of the company, amid revelations the entities could have been insolvent for more than two years.

The eponymous family trusts of directors Ronnie Michel-Elhaj and Paul Bitdorf submitted the plan on Monday, almost one month after the company was handed over to administrators at KordaMentha.

Nicheliving managing director Ronnie Michel-Elhaj.Credit: Ross Swanborough

The deed of company arrangement would comprise a lump sump payment of $2 million to both Nicheliving and its construction arm Projex Management and Construction, bankrolled by the sale of its Northbridge headquarters and a $200,000 deposit.

The remaining funds would be paid to the entities over nine monthly instalments totalling $522,000, with the money to begin flowing in shortly after Christmas.

In a report released on Wednesday, KordaMentha’s Richard Tucker and John Bumbak urged creditors to back the proposal when they met next week on the basis that it would provide the best return.

The administrators charged with undertaking an urgent financial assessment with a view to restructure the company have concluded the entities could have been insolvent for more than two years.

A preliminary probe into the company’s affairs has found Nicheliving likely became insolvent in August 2022, while Projex may have been insolvent from as early as June 2021.

The news comes more than a month after Nicheliving’s construction arm agreed to withdraw a State Administrative Tribunal battle for the renewal of its building licence for the next decade under a deal with the state government.

Projex had been stripped of its licence over growing debts, including a tax bill of more than $7 million.

But Nicheliving managing director Mihael-Elhaj had rubbished claims it did not have the capacity to clear its $44 million worth of debt, declaring it had $100 million in assets.

It has sold almost $12 million worth of property in recent months.

The deal was designed to allow the hundreds of customers waiting for their homes to be completed access to up to $200,000 in home indemnity insurance under policies issued by QBE.

With more than 200 homes unfinished at the time, the taxpayer bailout was tipped to cost up to $40 million.

While revealing he had not been briefed on the details of the proposed deal, Premier Roger Cook expressed surprise at news the directors had the financial capacity to retain the company given the state government had been forced to intervene to get homes completed for customers.

“It is surprising, it’s extraordinary in fact,” he said.

“But I’d want to just reiterate that the ban in relation to Nicheliving as builders remains in place — they will not be able to build, they will not be able to lay a single brick under that ban.

“I’ll leave [the administration] to run its course, but we have intervened in relation to the people who were impacted by Nicheliving’s mismanagement of their contracts. I’m very pleased that those people can now access our home indemnity insurance scheme, and because of that, we can get a roof over their head.”

The company has repeatedly defended its handling of client contracts, pinning the lengthy building delays on COVID, government stimulus, labour shortages and supply chain issues.

However, data suggested Nicheliving signed on more than double the number of customers it normally would between 2020 and 2021.

The construction division was the company’s primary income stream, with Nicheliving’s lawyer Martin Cuerden, SC, warning the SAT in August that the refusal of its building registration renewal would likely trigger the downfall of the entire group.

Nicheliving was contacted for comment, but a spokesperson redirected inquiries to administrators.

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