Deconstruction of building companies quickens
THE number of Australian companies that have gone into insolvency has soared over the year, with construction firms among the worst affected.
Figures from the Construction, Forestry, Mining and Energy Union show the monthly rate of construction companies with winding-up applications against them has gradually increased over the year from 15 in the month of June to 129 in the last three weeks before Christmas.
Statistics from the Australian Securities and Investments Commission show the monthly rate of insolvency cases has also climbed, with almost double the number in October, when there were 1296, compared to January.
Almost half the cases involve companies in NSW and a large number also come from Victoria.
CFMEU secretary Andrew Ferguson said subcontractors were perhaps suffering the most from this year’s economic slowdown, particularly those in the construction sector, with reports that some labourers were resorting to sleeping in their cars. This month $80 million of exclusive residential apartments in Point Piper linked to well-known developer Michael Bezzina were handed over to the banks.
A partner with corporate advisory firm PPB, Mark Robinson, is the receiver of the two Bezzina-backed companies placed in receivership, Pyoanee and Caprace, and said he was working with the union on the matter, but he did not confirm the amount owed.
However, Mr Ferguson said subcontractors and suppliers were owed $1.2 million in connection to the Point Piper project, while they were owed a substantial sum on another Bezzina development in the Sydney suburb Redfern.
“People are desperate in the lead-up to Christmas,” Mr Ferguson said.
He said it was getting to the point where employers did not have the money for wages and holiday pay over Christmas, and he expected that many small businesses would fail.
“There is a meltdown taking place.
“Many small businesses are facing financial ruin … their families are facing financial ruin.
“I have been with the union for 30 years and I haven’t witnessed anything more ugly than what I have witnessed at the moment,” he said. “Labourers are living in their cars and we think it is going to get very ugly next year.”
Another Sydney-based building company was placed in voluntary liquidation this month.
JPS Development & Construction, of which Jeffrey Sarkis is a director, owes at least $17.6 million to secured and unsecured creditors, according to the summary of affairs.
The company was placed into voluntary liquidation on December 15.
Hall Chadwick associate Mark Franklin, who is expected to be voted in as liquidator for the company at the next meeting, said the debt was more likely to be around $23 million.
Deconstruction of building companies quickens | The Australian
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