Fighting for subbies rights
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CORRECTION ON NORRIS ROAD PROJECT
Norris Road - Subbies have been paid over $700,000 to date (Including any overdue claims, inc December and any invoices due for payment in January. We are now processing with the Developer (Making a redirection of payments under our contract Clause 37.3) any invoice that are due February Payment run later this week Approx $200,000.
We will continue to do this till the project completes in 4 to 6 weeks. We have run a cost to complete report for the Developer and the PM (Client Side) to give clarity to the remainder of the project.
The developer said - we have been working closely with Bloomers and the subbies, both who have been very cooperative and wanting to get the job done. We have paid over $700,000 of direct payments to subbies and suppliers since this problem arose and I anticipate another $200,000 to be paid out this week. I believe that everyone has been paid in full up to date for their January claim and the majority of February has been paid with the balance to happen this week. There are sufficient funds to complete the project which only has about 4 to 6 weeks to go.
Summary
The circumstances around Bloomer Constructions is a fluid and ever changing situation. It's clearly not possible to provide an update that will appease everyone.
While it's been a frustrating time, we wanted to give Bloomer Constructions and their clients time to get deals completed to provide the best outcome for subbies, they are getting somewhere near that now.
With confidentiality agreements and all the complex negotiations, its just not possible to nail whats happening at any one time but following is what we know from discussions with Bloomer today.
Bloomer director Lachlan McIntosh has stated that "Bloomer Constructions have chosen their future team to complete the following tasks:"
- Maintenance (to ensure retentions come back to the company)
- Dispute resolution
- Accounting and legal
- Negotiations
- Disbursement of funds to subcontractors & suppliers as bank guarantees, cash retentions and the balance of contracts are released.
He said "we will work to ensure defect work is done and completion costs are monitored. We will work with all clients and developers where possible to recover retentions and the remainder of contracts".
There is no "one cap fits all" answer to describe the plight that Bloomer subbies face because in my experience, this situation is unique.
Bloomer Constructions has battled to limit the damage to subbies and like it or not, that brutal effort will provide the best result for subcontractors. Not for all, maybe not even for the majority but it has already delivered excellent results for some people and for them, I am pleased.
I am pleased for those subbies who have had a win, especially after seeing first hand and dealing with the fallout from all the liquidations since Cullen on 22nd December 16. It's still only mid March and everyone dealing with those numerous liquidations are tired already.
Project Updates
Western Avenue - Developer is waiting on bank approval before being able to proceed. They have indicated that they will be making payments to Bloomer subcontractors for work done but not paid for. My understanding of that is Bloomers January and February claims are unpaid so we can assume that when the funds are available, those claims will be paid direct to the subbies. A Bloomer Project Manager has been appointed to manage this job.
Dawson Parade - Last week 200k paid to subbies.
Mango Hill - Last week 300k paid to subbies.
Curwen Terrace - Contract was terminated by the developer. This job was close to completion and Bloomer will receive an accounting at the end of the job.
Tryon St - The developer is working closely with subcontractors and with their financiers to get the job started again as fast as possible. They have an independent quantity surveyor working on site and are meeting with their bank this week. The developer hopes to have everything finalised by the end of next week (24th March).
Hilltop - The developer has worked with subcontractors and their financiers to get their project moving again. There are some subcontractors working on site now.
The developer has engaged Rimfire under a "construction management agreement" to complete the project. The developer and Rimfire have met with all the subcontractors. They are working towards a financial resolution to complete the project and have allocated all the additional capital they have available. The developer has been working with Rimfire to finalise the cost to complete the project.
The Hilltop developer has given me some great news. Subcontract and supplier payments will be made from a Project Bank Account, that means payments will be assured.
Rivergate Shed - Some subcontractor have been paid upon the release of a claim from the developer to Bloomers which was enabled by a statutory declaration. The stat dec stated something to the effect that "upon payment of the claim, the subbies listed on the stat dec would be paid the amounts listed. Those payments have been passed on to the subcontractors.
Note: Its time statutory declarations in their present form are made redundant. They are a relic of the past and can be used as an excuse not to pay a genuine claim.
Progress Road - At the start 60 to 70c in the dollar to subbies, hopefully 100c by the end.
Subcontractor Payments
The sad reality is that some subcontractors may not receive anything. Others may get 40c or 60c in the dollar and others might receive 100% of their outstanding amounts.
Basically, it comes down to the following:
- Is the developer working with Bloomer and the subbies (doing the right thing)?
- How much does the developer have in their kitty after the appointment of a new builder or novation of the contract?
- How old is your debt? If it's December or older, it will take time and even then there are no guarantees.
- Does the developer need your trade on site now or later?
- How much does Bloomer have coming back in bank guarantees, cash retentions and unrealised claims?
- In answer to that, I believe it could be around 8 million dollars so this will be a patience game. Patience is not my strong suit but here, there is little or no choice.
Developers not doing the right thing by Subcontractors
There is no doubt that the majority of Bloomer clients and developers are doing their best to work with Bloomer and the subcontractors but there are a few who are not.
Please rethink the situation. You never know, you might want to do another development in the future.
With the unification of subcontractors through SubbiesUnited and Subcontractors Alliance, it has effectively shrunk the industry down, giving subcontractors a united voice. If anyone is burning subcontractors, we will soon know about it.
Invoices - December or Older
If the debt is December or older, in many cases, the best chance for payment will be when the cash retentions or bank guarantees come in to Bloomer. That money will be paid back to creditors but at this early stage, the rate of return is unknown.
This situation is not perfect, far from it but for some, its worked out well with several million dollars changing hands in the last few weeks.
There are a lot of unanswered questions about smaller jobs such as houses and the more remote areas like North Queensland. For those of you who have worked on these jobs, send me an email and I will forward it to Bloomer Constructions and try to get you some answers. support@subbiesunited.com.au
While it's slow, complicated and cumbersome, It's a far better proposition than the alternative which was liquidation.