Failures continue to dog the residential building sector. Photo / Supplied
Failures continue to dog the residential building sector. Photo / Supplied
Suppliers stopped credit to a struggling builder, hit by delays getting building materials and consents, as well as suffering from sizeable cost overruns on construction work.
Things got to the point where the builder decided to call it a day and hand over to liquidator Brenton Hunt of Insolvency Matters,who forecast a $698,000 loss.
In the latest case, Reuben James Green’s Green Builders owes nearly $700,000 but there is little prospect of people getting paid by the Christchurch builder who advertised as “your new best building friends, we just haven’t met yet!”
Seven businesses are secured creditors via the Personal Property Securities Register: Steel Building Products (SI), United Timber Merchants, Reofab, Smiths Hardware, UDC Finance for a Toyota van, KM Finance for an office photocopier and BizCap.
Hunt gave reasons for insolvency of the company, incorporated in 2009.
Commerce Minister David Clark has previously discussed the high number of luquidations in the building sector. Photo / Mark Mitchell
“Over recent years the company has struggled with the delays around building materials and building consents being issued and the constant increase in building material costs.
“Some projects in past years have run at a sizable deficit which has caused stress on the working capital of the company,” he added.
“A number of trade creditors had the company on stop credit. The director sought professional advice and decided to liquidate the company,” Hunt said in his first report issued yesterday.
Staff were “terminated” before liquidation but some of them were employed by a related party. Holiday pay of around $10,000 is still owed.
Inland Revenue PAYE and GST owing is estimated at $200,000. Unsecured creditors are estimated to be owed around $550,000.
Asked about the situation today, Green said it was a very emotional time for him and he didn’t want to say anything further.
A list of creditors was released with the first report.
Many were named including Bunnings Warehouse, Canterbury Recruitment, Eivirowaste Services, Hirepool, Ace Heat Pumps, Blackwell Motors, Kaikoura Marine Services, Luminate Electrical, Inland Revenue, Spark, NZ Transport Agency, Rangiora ITM, Smiths Loos, The Professional Builder, Showbiz Christchurch, Survus Consultants, Northern Plastering Services, Pro-Net, DFrost Air Conditioning, Dominator Christchurch and Independent Doors.
Green Builders is not alone and the Herald has reported this month on other residential builder liquidations.
Commerce and Consumer Affairs Minister David Clark said New Zealand had 283 building company liquidations in the 11 months to November last year, although those were not just due to financial failure but also the winding up of solvent businesses.
And Megan Woods, Building and Construction Minister, said the housing development and construction sector had always been prone to boom-bust cycles.
Meanwhile, Hunt has also forecast that Christchurch’s David Magill Builders 2017 would end up owing secured and unsecured creditors $1,006,500, of which $800,000 would be owed to unsecured creditors.
ACC, a council, telco, an energy provider, a roofing business, building material suppliers, plumbing businesses, scaffolders and Inland Revenue want money from the company, which blamed trouble getting materials and consents as well as Covid for the failure.
Earlier this month, the Herald reported on PKF Corporate Recovery & Insolvency’s Christopher McCullagh and Steve Lawrence handling the insolvency of Rosedale-based Auckland Building Specialists, estimated to owe trade creditors $460,000 but Inland Revenue a further $1.1m.
That company suffered from Covid-19-related challenges, material shortages and staffing issues.
Scaffolders, plumbers, Mico Plumbing and Bathroom, plasterers, Pink Bins Company, roofing people, Bunnings, Canon, air conditioning experts, cleaning and engineering companies, electricians, concrete specialists, painters, South Pacific Timber, door and fire people, Z Energy, hardware suppliers, and Resene Paints all appear on a list of creditors out with the PKF report.
