Probe on collapsed builder
The wind-up of the Port Melbourne-based firm - approved by creditors earlier this month - comes as administrator Hamilton Murphy cancelled building contracts for 70 homes, leaving buyers scrambling to find replacement builders.
Michael Caspaney of Hamilton Murphy declined to comment on any potential investigation when contacted by BusinessDay.
But the minutes of a creditors' meeting filed with the corporate regulator show preliminary inquiries had "identified potential offences" that could be investigated by liquidators.
The Tax Office has also flagged concerns about transactions made to "the Partners IP account".
Questions have also been raised about the circumstances under which one of the directors, Robert Wiederstein, resigned before the company's collapse in early August, according to documents filed with the Australian Securities and Investments Commission.
Co-director Graeme Varcoe, who also became secretary with Mr Wiederstein's departure, has previously told creditors about confusion surrounding the resignation and ARB's financial affairs when he returned from annual leave in mid-June this year.
"One of [Mr Varcoe's concerns] was whether his co-director had resigned, to which he was advised that he hadn't. Further inquiries made by him later disclosed that [Mr Wiederstein] had in fact resigned and that he had backdated his resignation to 31 May 2013," creditors' meeting minutes said.
"Following the former director's departure from the company it was at this time that [Mr Varcoe] realised that the company had major cash flow issues, with a substantial amount of money being payable to the company from clients in respect of progress payments."
Jack Hossain's new home in the western suburb of Maddingley had reached the framing stage when ARB collapsed in early August. By that time, Mr Hossain had only $15,000 outstanding on the $188,000 contract price, handing over his latest progress payment about a fortnight before the builder went into administration.
"They never said anything was wrong or that the company was in trouble. Then all the work stopped," he said. "I've been quoted $67,000 to finish the work."
Mr Varcoe and Mr Wiederstein could not be reached for comment.
cvedelago@theage.com.au
Frequently Asked Questions about this Article…
The Port Melbourne-based firm was placed into administration and creditors approved a wind-up. Administrators from Hamilton Murphy cancelled building contracts for about 70 homes, and the collapse has so far cost creditors more than $7.2 million.
Hamilton Murphy are the administrators managing the collapse. They cancelled contracts for around 70 homes, stopped work on affected projects and are coordinating the wind-up process; a named administrator, Michael Caspaney, declined to comment when contacted.
Preliminary inquiries noted in creditors' meeting minutes have "identified potential offences" that could be investigated by liquidators, so substantive investigations will be needed to determine responsibility. The Tax Office has also flagged concerns about specific transactions.
The Tax Office flagged concerns about transactions made to an account referred to as the "Partners IP account," according to the creditors' meeting minutes filed with the corporate regulator.
Documents lodged with the Australian Securities and Investments Commission show Wiederstein resigned before the collapse and that his resignation was apparently backdated to 31 May 2013. Co-director Graeme Varcoe reported confusion around the resignation and discovered it later, which coincided with uncovering major cash-flow issues.
Minutes say the company had major cash-flow issues and a substantial amount of money was payable to the firm from clients as progress payments. Some homebuyers who had made progress payments found work on their homes stopped when the builder collapsed.
Buyers were left scrambling to find replacement builders after contracts were cancelled and work stopped. One buyer cited in the article had reached the framing stage, had only $15,000 outstanding on a $188,000 contract, and was later quoted about $67,000 to finish the work by another builder.
The article highlights that corporate collapses can leave creditors with significant losses (more than $7.2 million here), trigger detailed investigations into directors' conduct and transactions (including Tax Office scrutiny), and disrupt customers and progress payments when administrators cancel contracts. It underscores the potential ripple effects of insolvency on creditors and homebuyers.
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