Subcontractors may lose out in the latest construction sector collapse as the industry grapples with ongoing challenges of business failure and insolvency.
In the latest development, restructuring insolvency specialist David Young has been appointed as a liquidator of the Integrated Construction Management Group, which went into liquidation on April 17.
Owned by directors Paul Attard and John O’Gorman, the company has offices in Sydney and Melbourne, and boasted a clientele including Investa, Charter Hall, Aviva and AMP Investors in fitouts and refurbishment services across the office, retail, residential, healthcare and accommodation sectors.
At its peak, the company turned over more than $50 million and employed 60 workers, whilst co-owner Attard was quoted in 2013 report in The Australian as saying that the refurbishment market was booming and that he was hoping for turnover of $100 million and staff numbers of 80 by 2016.
Young told media outlets the majority of the creditors are subcontractors and that he was yet to determine how much is owed.
He said the company had suffered a loss of $2.5 million and a major cash flow impact following an adjudication with regard to the Langham Hotel project.
The latest collapse comes as a Senate Inquiry considers how to address the issue of construction related insolvencies at a national level.
Submissions to that inquiry talked of a range of problems and challenges including phoenix companies, low margins and contractors being forced to take on excessive risk, challenges in business and cash flow management, late payments to subcontractors and poor productivity.
As many as 764 construction businesses went into external administration in the last six months of last year, ASIC data shows – almost twice as many as any other sector except for ‘Other’ (business and personal services).
In August, Opposition Senator Doug Cameron told the Senate creditors were losing $2.64 billion annually due to construction insolvencies.
The latest reports also follow anger over revelations earlier this month that the previously failed Walton Constructions continued to secure government contracts worth more than $64 million over a three month period to September 2012 despite the then Queensland Building Services Authority being aware from at least mid-2012 that the company had failed to meet financial reporting deadlines.
Walton went into liquidation owing $72 million in 213.