Wellington's The Paddington on Taranaki St where the builder was working. Photo / supplied
Wellington's The Paddington on Taranaki St where the builder was working. Photo / supplied
A building boss holds out hope for subcontractors who were working on Wellington sites run by a big builder which went into liquidation this week.
Rick Herd, chief executive of national construction business Naylor Love, was commenting on Armstrong Downes Commercial 2012's failure.
Shareholders Tony and Erica Doile and SimonTaylor called in Grant Thornton this week because they could not continue, leaving one worried subcontractor calling Newstalk ZB today saying he is owed $30,000.
Herd said subcontractors might be able to take some comfort from the fact the building jobs will need to be completed.
Although that won't be under Armstrong Downes' watch, others could step in, Herd said.
"Because the developers will want to finish their projects the subbies are likely to get paid so long as they can negotiate appropriate terms with the receiver/developer to finish," Herd said.
"The liquidators/developer will need to negotiate with the existing subbies for the sake of cost, continuity and liability in respect warranties and guarantees."
Rick Herd, Naylor Love's chief executive, holds out hope for subbies. Photo / Michael Craig
The liquidators said two of the company's largest projects suffered major losses as a result of fixed prices in an economic environment of spiralling costs, procurement challenges, and labour shortages.
Herd said the building business bosses would have known of the risks at the time they agreed to those terms and conditions.
"They signed the contract so should have understood their risks," Herd said of the fixed-price contracts.
Work was frozen at the 152-unit The Paddington on Taranaki St yesterday when the liquidators posted guards on gates to secure all work and equipment.
The Herald reported yesterday how the large Wellington commercial building business which worked on school projects and one of the city's largest apartment developments was being liquidated.
Shareholders in Armstrong Downes Commercial 2012 put their company in the hands of David Ruscoe and Russell Moore, according to Companies office records.
The first report is yet to be issued on the builder, undertaking projects sector insiders said today were worth around at least $80 million.
The Hutt Valley-headquartered company worked throughout the Wellington region for the last 20 years and undertook a number of jobs for the Government.
Hutt Valley High School's $8.6m redevelopment, Chilton St James and Karori West Normal School were education projects the business listed amongst its achievements.
Armstrong Downes Commercial's waterfront job on a park from Wellington City Council. Photo / supplied
"It's a surprise," one sector leader said of the liquidation.
"It happened fast and it's a reflection of the unstable market. Everyone is busy, but the pressure's at the financial end to make sure these things are still delivering."
The business said it specialised in Government, rеtаіl, education, community, office, industrial and multi-unit рrоjесtѕ in the Wellington region.
A statement from the liquidators said: "Two of the company's largest construction projects are suffering substantial losses as a result of being fixed price in an economic environment of spiralling costs, procurement challenges, and labour shortages.
"Following an unsuccessful attempt at restructuring the company's contracts, it has been decided the appointment of liquidators is in the best interests of customers, sub-contractors and other stakeholders to minimise further losses."
The builder has eight projects on. Armstrong Downes Commercial is the head contractor in most cases but does not directly employ staff. The workers are employed by other Armstrong Downes group companies, the liquidators said.
No other Armstrong Downes companies are in liquidation.
The liquidators control the sites, closed for a limited period as they examine the projects.
"These sites have been temporarily closed as it's in the best interests of all stakeholders to protect both ADC and third-party assets, and to allow time to assess available options for each site going forward," Ruscoe said yesterday.
Assets would be returned to subcontractors as soon as practicable.
Grant Thornton will be contacting customers and suppliers about its appointment in the next few days.
The first report is due out on Friday. How much information that will give when the Grant Thornton accountants have only had a few days to assess the situation is unknown.
