Hundreds of suppliers and subcontractors of the Western Australian construction company Pindan could be left out of pocket by up to $80 million, after the company collapsed into external administration yesterday.
Samuel Freeman of Ernst and Young was appointed as liquidator on Wednesday following unsuccessful efforts by Pindan’s directors to bring in new investors.
There are about 1,400 creditors in total who are owed a combined $80 million, an Ernst and Young spokesperson confirmed.
Of those creditors, about 500 are subcontractors and 400 are trades suppliers.
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Pindan is a large construction company based in Perth that services a number of Western Australian government projects.
The company has about 280 employees working on 68 current projects. However, administrators expect that 135 employees will be let go from the wider Pindan group.
EY Administrator Sam Freeman told the ABC that it is likely some subcontractors will be left out of pocket.
“Given the volume of claims here and the assets that we’re aware of, unless we’re in a position to complete contracts with funding to do so, there will be creditors left out of pocket,” he said.
Pindan’s directors and administrators are currently working together. However, the outcome of the administration process is yet to be confirmed.
“It is early days, so it’s too early to predict the outcome,” the EY spokesperson said.
“But there is very little funding available which is a challenge for completion of projects.”
The collapse of construction and property company has prompted calls from the Construction Forestry, Maritime, Mining and Energy Union (CFMEU) for federal and state governments to take action and establish national security of payment laws.
CFMEU, which represents 100,000 construction workers nationally, said security of payment laws and statutory trusts would ensure workers and subcontractors are paid for the work they do.
Dave Noonan, CFMEU national construction secretary said it was a disgrace that workers and small businesses are “left carrying the can when builders and property developers like Pindan go under”.
“The industry requires consistent national laws rather than piecemeal rules that savvy developers can drive a truck through,” Noonan said.
CFMEU is calling for the state and federal governments to act on the Murray Report and implement its 86 recommendations.
The Murray Report, which was commissioned by the federal government in 2017, investigated the widespread industry practice of non-payment or late payment of money owed for work done.
The report’s key recommendations include the establishment of national security of payment laws and the introduction of statutory trusts to ensure workers and subcontractors are paid when developers collapse.
“The collapse of Pindan could have a devastating impact on construction in WA as the non-payment of money owed to subcontractors ripples across the industry,” Noonan said.
SmartCompany has contacted Pindan for comment.