Liquidators are working to realise the assets of collapsed building company Queensland One Homes in the hope of recouping millions for creditors of the business, as insolvency experts say the east coast of Australia and the construction sector are areas to watch for company collapses.
Queensland-based home builder Queensland One Homes Pty Ltd entered liquidation on July 6, leaving 35 building sites unfinished at the time of liquidation, and the Gold Coast Bulletin reports the Queensland Business and Construction Commission has now suspended the building licence of Queensland One Homes.
The Commission has also confirmed to the newspaper it is investigating another related business, Empire Constructions Pty Ltd, for allegations of phoenix activity.
On the Queensland One Homes’s website, customers are offered building services for new homes, drawing on more than 30 years of industry experience and promoting an average 14-week build time.
Liquidator Michael Caspaney of Menzies Advisory tells SmartCompany he is now seeking to secure and realise the assets of the business, explaining this must be done before attempts are made to recoup the $3.5 million owed to 133 creditors, including employees of the business and sub-contractors seeking unpaid invoices.
Caspaney says details of arrangements between Queensland One Homes and Empire Constructions will also be scrutinised before the liquidation process can be completed.
“There was a deal it looks like, some sort of novation agreements between Queensland One and Empire Constructions, which is technically a connected company. We need to scrutinise those and work out if the deal was at arm’s length,” he says.
Fallout from the liquidation comes as concerns continue to rise over the vulnerability of the construction sector to insolvencies, with experts warning the Western Australia and Queensland economies remain concerning.
In June, apartment builder CMF projects collapsed owing $12 million, as Queensland government officials spoke out about sub-contractors bearing the brunt of big builders going under.
At the time, managing director of Market Economics Stephen Koukoulas told SmartCompany the potentially overheating apartment markets in Melbourne and Brisbane could see many sub-contractors left “high and dry” in coming months.
Insolvency experts at FTI Consulting also report that while year-on-year corporate failures are on the decline across the country, there was a spike in companies entering external administration in June.
“In June 2017, there were 816 companies entering external administration, up from 792 the previous month, and the highest monthly number of appointments for the 2016/2017 financial year,” FTI explained in a statement.
Senior managing director in corporate finance and restructuring at FTI Consulting, Michael Ryan, said insolvencies on the east coast of Australia have picked up over the past 12 months.
“Nationally, the industries that are currently showing the most signs of distress are retail and building and construction,” he said.
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The top three states for increases in insolvencies are New South Wales, Victoria and Queensland, each of which has seen an increase in the number of companies appointing administrators compared with this time last year.
Caspaney tells SmartCompany he believes Queensland One Homes may have fallen into trouble over a financing agreement that did not go to plan.
“My first feeling is that the company had a deal with someone who provided them with finance, and the company did not appear to be able to satisfy that deal,” he says.
There is still work to be done to secure and realise the assets of the company ands no more information about the process can be released at this time, Caspaney says.
SmartCompany attempted to contact Queensland One Homes directly this morning but was unable to do so prior to publication.
Empire Constructions Pty Ltd has been contacted for comment but did not respond prior to publication.