When a developer like Ralan Group can fall over and their Ruby Towers builder, a company as switched on as Hutchinson Builders doesn't see it coming, the question is, are we on the brink of falling off the construction cliff, or at minimum, a construction recession?
In July the Reserve Bank dropped cash interest rates to a historic low of 1% but they are dreaming if they think people are going to rush out and borrow money to stimulate the economy.
There has been a recent flurry of activity in the building industry and none of it good with QVN Group in administration and creditors meetings on the 16th August in 3 states simultaneously so that creditors have to choose one or the other. That should take the heat off those who should be facing the wrath of a room full of very angry creditors.
QVN Update thanks to the Gold Coast Bulletin.
It gets worse with claims of potential phoenix companies set up this year.
"Company records show the sole director of the collapsed QNV companies, Christopher Eaton, registered a new company, QNV Group Holdings, which is not in external administration, in March, along with three other companies: Aevum Homes Services; Aevum Homes 1; and Capitale Del Famiglia.
Mr Eaton registered Aevum Homes, Aevum Propery Group Holdings and Aevum Homes Realty in February; Capitale Del Rei in January; and Aevum Property Group on June 11".
We then have Ralan Group who had some of their buyers sign "side agreements" so they could access their deposits which should have been in the relative safely of trust accounts.
"Administrator Said Jahani of Grant Thornton said creditors should “prepare for a poor outcome”.
“It’s still very early in the process, however current investigations suggest a massive shortfall of $277 million in the trust account from the deposits released on Ralan developments.,” he said."
The debts of Ralan Group could be in excess of half a billion dollars. How does this happen? One reason is that developers are not licensed by the QBCC in Queensland and are a law unto themselves.
Then we have the JM Kelly Group public examination where the founding director pulled the Alan Bond card "I am going on 80 and some of these things I can't recall".
JM Kelly Group and its predecessor in 2016 stripped upwards of 50 million from creditors. It's one of the worst failures of the QBCC and the public servants involved to allow contracts to be transferred from a liquidated company into JM Kelly Group while at the same time, they did not ensure that the subbies owed money were paid first.
Some shiny arsed Qld Government pencil pusher should answer for that.
We also have the ongoing saga of Cullen Group. Creditor activism was responsible for the appointment of the current liquidator. The Cullen Group liquidation is one of the worst examples of injustice in the annals of Queensland Construction history.
At the upcoming Cullen Group public examination the question has to be asked, how did Cullen get a Category 4 QBCC licence.
That licence category facilitated 40 million of creditors money to disappear into thin air.
I know one subcontractor who lost over $500,000 in the liquidation yet he is one of the 30 odd creditors who are being sued for unfair preferences.
What is grossly unfair is Section 588FA(1) of the Corporations Act which allows this crime to be perpetuated.
The Liquidator is bound by the Corporations Act to act in the best interests of all creditors but the Corporations Act as it stands is a horses arse so he and his fellow liquidators should be pushing for changes to what he told me are archaic 400 year old laws.
The liquidator has stated he is chasing these preferences so a dividend can go to ALL creditors while that is admirable, from my experience, subbies would rather forego a few miserable cents in the dollar gained at the expense of a hand full of hard working subbies when they know the main beneficiaries are highly paid lawyers.
Section 588FA should only be there to recover funds from mates, families or related parties of these crooks who actually did get an unfair advantage or benefit.
It should not be there to break subbies who were lucky or smart enough to get paid. The subcontractor I mentioned above put millions into this job in labour and resources but if the liquidator and his lawyers are successful, he will have done the job for nothing.
We will continue to fight this injustice.
There is also an imminent public examination of the Queensland One Homes director.
We have reports on our members forum of a builder telling subbies "I am just waiting on money coming in from a few new slabs so that I can pay you for the roofs you put on those houses the last few weeks". Robbing Peter to pay Paul.
What sort of business model is that? They have been spinning this for months, we all know where it ends for this builder and many others like him and the subbies who trusted him.
One subbie took over from a discarded subbie on a promise that he would be paid weekly. No payment 1st week, no payment 2nd week, no payment 3rd week then he gets the old shonks staple, "I am waiting on slab payments blah blah blah".
When a builder changes subbies midstream (which was modus operandi for Cullen Group and all other insolvent builders), it should be considered a RED flag until proven otherwise.
Subbies be very careful with who you work for, drive hard bargains in regard to payment terms and do your due diligence, we are now entering uncharted waters.
If you are a genuine subcontractor, join SubbiesUnited, collectively we can make a difference.