Yesterdays Bulkbuild first creditors meeting was a farce which degenerated into uproar when the administrator abruptly postponed the meeting for 7 days.
A majority of Creditors wanted to replace the builder appointed Administrator Leon Lee, director of Moreton + Lee Insolvency.
The fact that the builder was making enquiries back in February is grounds for an independent review.
In his preamble Mr Lee said that if a majority of creditors wanted to replace him, he would step aside. It all sounded quite reasonable but little did we know...
When it came to the crunch in a fiery meeting and faced with an overwhelming majority vote of almost 2 to 1 against him, it was a different story;
- 13 creditors wanted Mr Lee gone including the developer.
- 7 creditors voted to keep him (what the hell were you people thinking?).
- Monetary value of over 2 million wanted him gone including the developer.
- Monetary value of almost $900,000 voted to keep him.
- Without the developer it was 12 to 7 with the value slightly in favour of those who wanted him out.
Faced with this huge deficit, the meeting degenerated into a fiasco when Mr Lee refused to accept the creditors decision, after all, he was the umpire and the umpires count was at odds with the count of Les Williams from The Subcontractors Alliance.
When Les questioned the discrepancy, Mr Lee mumbled something that was unintelligible to those listening.
When faced with the inevitable, Mr Lee hurriedly postponed the meeting for a further 7 days and that will come at a cost to creditors and the money trail will be 7 days colder. He postponed the meeting before giving some of the creditors a chance to speak.
Everyone in the room knew what the outcome should have been yesterday except Mr Lee.
Instead he decided that he needed another week to assess the largest Proof Of Debt from the developer of the Bulkbuild Project and that the vote count was not a majority. He agreed that the developer would be entitled to claim liquidated damages but that was all. We all know that other than the LD's, there are alway substantial holding costs but none of that was considered.
He denied another creditors proxy who had a POD for 87k despite that creditors attendance where he confirmed that his vote was to remove the administrator. This vote was ignored on some obscure technicality.
Mr Lee had previously called this subbie asking him which way he was going to vote and spent a long time on the phone trying to convince him that he would do a better job.
Mr Lee could be under no illusions on how that subbie was voting.
By this point Mr Lee was beside himself. He failed to make a decision despite the weight of creditor opinion confronting him.
When Was Mr Lee First Approached by Bulkbuild's Lawyers?
Let's rewind, Mr Lee told the meeting that he was first approached in mid February 2020 by Bulkbuild Lawyers that this Administration, soon to be a Liquidation was on the cards. He was appointed around 18 May 2020.
In other words, over 3 months ago it was clear to any number of people that Bulkbuild would not survive.
These are matters that need to be independently investigated.
In a letter to creditors on 14th May, the director of Bulkbuild partially blamed the global financial situation, (Covid 19) for his companies financial woes but clearly he was in trouble long before Covid 19 became an issue in Australia in late March.
Further to this, when Mr Lee was asked why he or others in the know didn't do something back in February to stop the carnage that came 3 months later to Subbies and Suppliers, Mr Lee said the approach to take on the Administration was "confidential". He said he could not breach that confidence.
One subbie who was affected by what happened in February and the months after was the vote and POD that Mr Lee denied.
I will make it clear, I am not saying that Mr Lee had the power or the right to do anything about the impending administration/liquidation back in February but the fact he knew is reason enough to want someone who is independent.
That subbie didn't start working for Bulkbuild until late February. His loss of 87k could and should have been avoided. He and others could have dodged this bullet but no one who has the potential to earn a large sum of money out of any of these pre-planned liquidation schemes, gives any consideration to the victims.
They did nothing, they let this subbie and many others fall into the trap which has the potential to destroy some of them.
In that 3 months, dozens of creditors continued to pour their resources into Bulkbuilds projects. The original estimate of the loss to creditors was 1.6 million but like it always does, it grew substantially. Now the estimate is 3.4 million owed to these creditors who are always, predominately subcontractors.
People Knew This Was Coming Yet They Did Nothing
People knew this was coming yet they did nothing except the director who signed stat decs, received large payment claims from the developer but failed to pay the majority of subbies.
To some people a liquidation is nothing more than an opportunity to make money, plenty of money where the senior hourly rate is an outrageous $500 plus, $350 per hour for those less senior.
Subbies how would you like to be on an hourly rate like that? If you earn't those dollars, you might be able to afford these huge losses.
These opportunities for pencil pushers represents financial destruction for subbies, years of hard word gone at the stroke of a pen.
The developer became concerned when on 11th March the QBCC suspended Bulkbuilds licence. The suspension was lifted on 7th April 2020.
The reason the suspension was lifted is explained by the Administrator in this email to creditors on 25th May 2020.
"The QBCC advised me today on 16 March 2020 (just over 2 months ago) the director, Digen Hur signed a Deed of Covenant and Assurance in the amount of $480,000. This means if the company is placed into liquidation on 22 June 2020, the liquidator can issue a demand to Mr Hur to pay $480,000 to the company. If payment is not made I can commence legal proceedings against the director for payment. At this stage, the Deed of Covenant and Assurance appears to be the largest “asset” of the company".
The developer spoke passionately about the need for a change of administrator to someone who is independent and didn't have a finger in the pie back in February.
As a result of the QBCC suspension the developer quite rightly asked the Bulkbuild director to sign a legal document, a Statutory Declaration stating that every subbie was paid up to date before each progress payment was made. The last of which was $800,000 a week before the administrator was appointed.
Little or none of this money was used to pay Subbies.
The director duly signed these stat decs, the developer is ropable and rightly so. Where does this leave everyone?
The developer has paid the director of Bulkbuild over 2 million in claims supported by stat decs, very little of which was paid to subbies and suppliers.
Where did the money go? The meeting was told that some may have gone to investors.
The meeting was a farce.
How can any creditor now put their faith in someone who was in talks with the builder or his representatives 3 months earlier? Someone who said he would step aside if a majority wanted him gone and then deny the figures in front of him.
We are going to ask ASIC to have someone attend the next meeting so that this ludicrous situation cannot happen again.
Message To Mr Lee
Mr Lee, the vast majority of creditors do not want a builder appointed liquidator in this job or any administration or liquidation. That is no reflection on your honesty or ability, it's just the way it is.
Especially one who first approached in regard to this job 3 months ago.
This could have been avoided, at the very least the damage could have been mitigated if the builder had pulled the pin back then, what has happened since to the subbies and the developer is a disgrace.
The lack of action by so many people is a sad indictment of the lucrative insolvency industry.
Prepare yourself, we are coming at you and will do so on every occasion of a similar nature that presents itself!
The last word belongs to the wife, one half of a husband and wife team, victims of this fraud and a number of other Phoenix schemes;
"Our" story - any creditor sitting on the fence - LISTEN!! Not really wanting to put our personal life out there BUT -
- 2003 - young family 4 children - Terry Seirlis Constructions goes down - we lost 250K and our family home.
- A few "little" ones in between the next few years, same story but we continue.
- 2017 - older family, new house - CMF Projects goes down - we lose $600K and our family home AGAIN!
2020 - Bulkbuild goes down - we lose $120K.
All of these companies/directors have lied and signed false state decs etc etc - where the hell is the QBCC in all of this??
Each time creditors are unable to change builder appointed administrator/liquidator - directors not followed up with legal action!!
All of these people still working in this same industry - none of them have gone to jail!!
WTF - we will most likely not see any of your $$ but at least get the bastards out of the industry!!
That meeting was pathetic - and signed off by administrator before any of the subbies had finished talking!!
Including the developer, we had 13 votes, he had 7. That is almost a 2 to 1 majority. He said if it was an overwhelming majority he would concede yet he postponed the meeting instead.
There is no possible way that QBCC licence should have been re instated UNLESS this builder and his cohorts have criminally lied!!