Application filed to wind up troubled Reed construction group as investigation continues into missing $90 million
Friday, May 25, 2012/
A proceeding has been filed in the NSW Supreme Court to wind up Reed Constructions Australia after the construction company missed a government-imposed deadline earlier this week.
The NSW Government gave Reed until May 21 to prove it could restart work on key major works projects after the construction company suffered a severe cashflow crisis and failed to pay subcontractors on four road projects, causing the workers to down tools.
Reed was described by the state opposition as on the verge of collapse with 1,500 jobs at risk.
That deadline has passed and now BCI Nominees has commenced proceedings, which will be heard on June 20, to wind up Reed.
Church and Grace is representing BCI Nominees but the law firm did not respond to SmartCompany’s request for comment prior to publication.
Reed has claimed it is owed up to $97 million from work it has completed on Building the Education Revolution and other government projects.
However, the NSW Government said it is investigating whether up to $90 million of Building the Education Revolution money was diverted to expand a division of Reed.
An expert panel, led by Andrew Rogers QC, was established by the government when it learnt of Reed’s financial difficulties in February.
Reed agreed to a government demand that subcontractors be paid first from any decision on Reed’s claims.
Reed Constructions told SmartCompany it was unable to comment on the wind up notice.
The company issued a statement from managing director Geoff Reed, in which he said the company and the government were still finalising the expert panel’s determination.
“Reed Constructions Australia Pty Ltd is pleased that the expert panel has provided its interim determination for liability relating to variation claims for works carried out by Reed for Roads and Maritime Services and the Building the Education Revolution Program,” Reed said.
“As Reed and the NSW Government are in the process of finalising the determination, we are unable to make any further comment at this time.”
NSW Minister for Finance and Services Greg Pearce released a statement earlier in the week that said the government’s priority was to protect jobs and ensure the projects were completed while ensuring taxpayers got value for money.
“The NSW Liberals and Nationals are getting on with the job of fixing this mess so that the projects can be completed as soon as practicable,” Pearce said in the statement.
SmartCompany contacted Pearce, but he failed to respond prior to publication.