Another builder who has been building homes for 50 years has gone into liquidation, owing more than $10 million to creditors.
A nearly 50-year-old Victorian builder has gone into liquidation, owing its creditors more than $10 million.
Family-owned Langford Jones Homes, which builds homes in Melbourne Bay, South East and Phillip Island, ceased operations last Thursday.
There are around 65 property developments in various stages of completion, with more than 250 creditors owing more than $10 million, RSM Australia partner liquidators Jonathon Colbran and Richard Stone Partners said in a statement posted on the website. of the society.
The carmaker’s shareholders injected additional funds to keep the business afloat for “some time”, but the situation proved untenable due to market conditions, including rising labor costs and materials and the impact of a recent cyberattack.
“The company recently experienced a significant cyberattack, higher costs for labor, supplies and materials, supply chain delays and skilled labor shortages, and all this resulted in substantial financial losses for the company,” Stone said.
“This perfect storm of supply and labor shortages and high costs is a common theme in the building and construction industry at the moment and unfortunately it has become unsustainable for Langford Jones.
“Our task now is to coordinate the delivery of construction projects to owners and seek to realize the value of all company assets.”
Australia’s construction industry is in crisis, with many companies going into liquidation so far this year due to rising building material costs and ongoing supply chain issues, putting them out of business .
CreditorWatch recently warned that the situation in the sector was “disastrous”.
Like the rest of Australia’s economy, the construction industry was recovering from Covid-19 but was hit by a ‘perfect storm of staff shortages and exploding costs as inflation soars globally,” they said in a paper.
“Construction has the worst overdue payment in the entire industry,” CreditorWatch said.
“About 12% of construction companies are more than 60 days past due with their suppliers.
“The risk is that construction will collapse in a cascade, creating a chain reaction of bankrupt businesses. This could have a serious impact on Australia’s economic recovery.
Another Victorian homebuilder, Victorian building firm Snowdon Developments Pty Ltd, collapsed last week, leaving 550 homes in limbo and 262 creditors cumulatively owed $17.8 million.
The 52 employees were fired during an hour-long crisis meeting that day, during which company directors announced they had appointed outside directors.
It came after months of stalled construction work, suppliers and contractors seeking payments and employees not receiving their pensions. Staff also claimed he had not received his fortnightly salary due on Monday.
News.com.au spoke to one of the co-directors, Shane Deane of Dye & Co, Solvency, who said: “When they [companies] stop paying super and when they stop paying the ATO that’s usually a pretty strong sign that they’re trading while insolvent or [there is] serious cash flow problems.
Snowdon Developments has reportedly not paid pensions to staff since October, according to news.com.au.
Snowdon Developments entered voluntary creditor administration on July 1.
Shane Deane and Nicholas Giasoumi of Dye & Co, Solvency and Turnaround, have been appointed directors.
“Control of the company has reverted to the directors,” they advised creditors in a document emailed Friday night.
“The company has ceased trading with immediate effect,” they added later in the email.
Mr Deane said ‘at last count’ Snowdon’s debt had snowballed to $17.8million among its 262 creditors. Of this amount, the largest debt is about $4 million to the tax office. There are also three private creditors who each owe more than $1 million.
There are also 252 customers who “paid their deposit and nothing happened” according to Mr Deane, saying they were in very early stages of their construction work.
Another 268 homebuyers are in “various stages of completion.”
On top of that, Snowdon has $9 million he owes to “related creditors”, which Mr. Deane explained as “entities related to directors who invest money in Snowdon to keep it afloat. “.
Snowdon’s sister company, Pivot Construction Group Pty Ltd, which was a developer with the same office, staff and management team, is also involved in the administrative proceedings.
It has 74 homes affected and 136 creditors – many of whom are also Snowdon creditors – owed a total of $4.5 million, with the highest debt being $600,000.
“The business was suffering from cash flow and supply issues due to the Covid pandemic which significantly impacted the construction industry,” the directors wrote in their preliminary report shared with creditors.
Despite initial discussions with administrators in April, the business continued to operate until July.
“The intention was to get the company out of its difficulties,” the directors’ report said.