Collapses highlight subcontractors’ plight

Posted April 27, 2016

ASIC_SX collapse

A number of companies have collapsed owing millions to subcontractors in the months surrounding the circulation of a discussion paper promoted by the Queensland Government on the issue of security of payment.

They include Trac Construction, SX Projects Queensland, Lean Field Developments (LFD) and Scott & Ensoll, a contractor to the mining industry.

Trac Constructions owes unsecured creditors more than $9 million after quitting seven building sites around Brisbane with work uncompleted.

Brisbane-based Trac put itself into liquidation after the company had exhausted all avenues to keep the business going in early March.

The creditors include carpenters, electricians, landscape architects and earthmovers.

The company’s assets also are subject to a registered security interest by the National Australia Bank and OpenCorp, a developer of two projects where Trac was the head ­contractor.

Upper Mount Gravatt-based SX Projects is also being wound up, owing creditors an estimated $4.6 million.

Sydney-based SX Projects Pty Ltd collapsed in New South Wales with debts of $20 million in 2013.

A report to creditors by liquidator Deloitte has revealed that LFD, a contractor to the Santos CSG work in the western Darling Downs region, recorded losses in 2014 and 2015 and now owes creditors $29.4 million.

The Sunshine Coast-based Scott & Ensoll have been in business for 40 years, offering tailored project solutions to the mining industry.

All staff were notified earlier this month that there was no more work but administrator Worrells Insolvency and Forensic Auditing is still processing paperwork.

Subcontractors Alliance chairman Les Williams said the construction company collapses in Brisbane were very much linked to a looming oversupply of apartments and smaller profit margins.

“And Santos is feeling the pinch of lower commodity prices while Scott & Ensoll were victims of the downturn in the mining industry,” he said.

Mr Williams questions whether businesses on the brink of collapse should have the ability to appoint an administrator or liquidator.

“An integral part of pre-packaged liquidations is pre-appointment advice from the liquidator prior to appointment,” he said.

“There could be a conflict of interest … insolvency professionals are ‘officers of the court’ so why not let the court make the appointment?”

Subcontractors owed money by LFD will be seeing the inside of courts often in the months ahead.

They must take legal action under the Subcontractors’ Charges Act (SCA) to recover owed money.

With LFD now gone, subcontractors will seek Supreme Court of Queensland approval to get their cash from Santos.

 

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