Construction company collapses owing $18 million as insolvency figures show industry "in for more pain"
Another construction company has collapsed, owing creditors at least $18 million as new figures show the industry is suffering more insolvencies than any other.
The latest figures from the Australian Securities and Investments Commission show 10,632 companies collapsed last year, the highest figure ever recorded. More than one-fifth of those were in the construction industry.
Regional Victorian builder Macalister Constructions has collapsed owing 350 creditors millions of dollars. The company owes its bank $6 million and a further $12 million to other creditors. The Australian reported employees are also owed $250,000.
Appointed administrator Richard Cauchi of SV Partners is quoted as saying the company attributed the debts to a dispute with a major debtor which owed the company $400,000.
SmartCompany contacted the administrators for comment, but they were unable to do so before publication. Australian Securities and Investments Commission filings show the company was placed in administration last month.
The creditor's report quoted in The Australian claims the company owes the Australian Taxation Office $800,000, Allianz Australian Workers' Compensation (Victoria) $55,549 and Bunnings almost $25,000.
Jim Downey, founder of insolvency accountancy firm JP Downey and Co, told SmartCompany the construction industry has been hard hit because of an unstable property market.
"The property market has been volatile and the GFC has made it quite difficult for funding of projects, and developers have found themselves caught short.
"Where property values subside and banks get nervous and want to reel in their loan to valuation rations, which has consequences to any fairly tight development. Couple that with the general economic malaise and the high dollar and that forces some companies to go into administration," he says.
Statistics from the Australian Securities and Investment Commission indicate 10,632 companies collapsed last year, averaging 886 a month. In December, only 730 companies were placed in administration, down on the monthly average.
Analysis of the statistics by insolvency firm Taylor Woodings indicated the total number of external administrations were up 1.4% on 2011. In its analysis, the company said the figure is the highest number of insolvencies since the data was first recorded in 1999.
The construction industry had the highest number of insolvencies for the 2011-12 financial year, accounting for 22.1% of the 10,000-plus insolvencies.
Downey says he expects 2013 will offer more of the same with companies continuing to struggle against tough market conditions.
"I don't have any crystal balls on that, but I would expect there to be more of the same. I don't think we'll see our dollar return to the 80c of old in the near future and this will have serious repercussions in tourism and retail and general household budgets. I think we're in for more pain," he says.