Debts undermine builder
The revelations come as administrators attempt to negotiate the sale of ARB to a major-volume builder, although it is unclear how this would affect subcontractors and would-be home owners caught in the collapse.
The Port Melbourne-based firm, which builds about 300 houses a year in western suburbs such as Melton, Bacchus Marsh and Taylors Hill, was placed in administration in early August.
The first creditors' report issued by administrators Hamilton Murphy warned that following preliminary examinations ARB had debts of more than $7.21 million to at least 240 creditors and that it was likely the return to unsecured creditors would be "nil".
Michael Caspaney of Hamilton Murphy said negotiations were under way for the sale of ARB to another builder but declined to identify it by name because 18 other industry players had expressed an interest in buying ARB.
However, subcontractors were told that while administrators would "encourage" any buyer to use existing tradies it could only be a recommendation. Mr Caspaney also warned that pressing the issue posed "a real risk" of deterring a buyer.
Prompted by creditors' concerns, administrators also promised that investigations would be conducted into whether ARB was trading while insolvent and how a company could go broke when it received progress payments on its construction work.
ARB director Graeme Varcoe said he became concerned about ARB's business affairs as early as June last year when he became aware of "major cash-flow issues".
Despite repeated failures to sell the business, Mr Varcoe said right up until the appointment of administrators he believed he could trade out of the company's financial problems but was frustrated due to "unforseen circumstances".
The collapse comes as activity in Victoria's construction industry recently hit a four-year low, with the number of building approvals plunging 24 per cent in June.
Housing Industry Association chief economist Harley Dale said the "very soft" residential conditions were hurting the construction and associated industries.
"It's a reality that in many markets in Australia the new homes market is still flat or declining. There's been a consistency to the weakness that has become very concerning considering the importance of construction to the health of the economy," Mr Dale said.
cvedelago@fairfaxmedia.com.au
Frequently Asked Questions about this Article…
Port Melbourne builder Australia’s Residential Builder (ARB) was placed in administration in early August after revealing debts of more than $7.21 million to at least 240 creditors. Everyday investors should care because the collapse highlights risks in the residential construction sector, potential losses to unsecured creditors and broader weakness in the Victorian housing market that can affect related investments.
Administrators reported ARB had debts exceeding $7.21 million owing to at least 240 creditors, and they warned the likely return to unsecured creditors would be 'nil' — meaning unsecured suppliers, subcontractors and other non‑secured creditors could face total losses.
Administrators Hamilton Murphy, led publicly by Michael Caspaney, are handling the matter and said they are negotiating a possible sale of ARB to a major‑volume builder. Caspaney declined to name a buyer, noting around 18 industry players had expressed interest.
Administrators said they will 'encourage' any buyer to use existing tradies, but this is only a recommendation — not a guaranteed obligation. They also warned that pressing buyers on this point could deter a sale, so outcomes for subcontractors and payment prospects remain uncertain.
Yes. Following creditor concerns, the administrators promised investigations into whether ARB traded while insolvent and how it could have become insolvent despite receiving progress payments on construction work.
ARB director Graeme Varcoe said he became concerned as early as June last year about 'major cash‑flow issues.' He said he tried to sell the business and believed until the administrators were appointed that he could trade out of the difficulties, but said repeated failures to sell and 'unforeseen circumstances' prevented that.
The collapse comes as Victorian construction activity hit a four‑year low, with building approvals plunging 24% in June. Housing Industry Association chief economist Harley Dale described residential conditions as 'very soft,' warning that flat or declining new homes markets are hurting the construction industry and related sectors.
Investors should monitor administrator updates on any sale of ARB, outcomes of the insolvency investigations, creditor recoveries, and broader indicators such as building approvals and housing demand in Victoria — all of which can signal financial stress or recovery in the residential construction supply chain.
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