CreditorWatch’s Damning Report on the Collapse of Victorian Snowdon Developments

0

CreditorWatch painted a ‘disastrous’ picture of a Victorian building firm fearful it was on the brink of collapse and owed more than $2.5million.

Concerns are growing over a beleaguered construction company as a damning credit report concluded the business was likely to collapse.

Earlier this week customers, creditors and staff came forward on news.com.au with fears that Victorian construction company Snowdon Developments Pty Ltd was on the brink of collapse.

Several employees revealed they had not received superannuation payments since October, while some clients’ builds had stalled for months, leading to financial ruin for many of them. News.com.au understands there are over 200 residential homes being built.

On top of that, Snowdon Developments has 15 creditors suing it for debts of over $2.5 million who are asking the Supreme Court of Victoria to impose a winding-up order to force the company into liquidation.” due to insolvency”.

It is understood that some of those debts have been paid off and the company says it can afford to repay the rest of its expenses after a property sale next month.

A Snowdon contractor is working past retirement age as he tries to support himself while awaiting a $480,000 payment from the company and another creditor says he is struggling to feed his family.

Now news.com.au has obtained a report from CreditorWatch which has revealed that Snowdon’s payment times have skyrocketed over the last year and it also has an off-scale risk score, scoring zero or “F”.

Deliver more live and on-demand business information with Flash. More than 25 news channels in one place. New to Flash? Try 1 month free. Offer ends October 31, 2022 >

Snowdon is currently embroiled in a legal action and has five defaults registered against him.

Another company the Snowdon directors are involved with, Pivot Construction Group Pty Ltd, is also facing defaults and legal action, which CreditorWatch said was concerning.

Since April, when legal action was first filed against Snowdon, the company’s credit risk score has fallen to an ‘F’, meaning ‘one or more creditors have sued litigation or other material actions in response to unpaid debts, or the entity is entering or has entered into insolvency”.

Snowdon Developments has maintained a stable credit rating for the past three quarters, but quickly fell from a rating of 510 out of 850 in March to zero in April 2022, “indicating a likely failure over the next year”, according to CreditorWatch.

Its payout rating isn’t much better, sitting at a D, with the report warning that it “has high repayment risk” and that “on-demand cash trading is recommended”.

Do you know more or have a similar story? Contact us | [email protected]

Snowdon is on average 40 days behind on his payments while the industry average is just seven days.

“Companies with average arrears over 30 days are among the 15-20% worst payers nationwide,” CreditorWatch said.

“Small and medium-sized businesses in this category run an average of three times the risk of insolvency of businesses that pay on time.”

It comes as CreditorWatch warned that the state of the construction industry is in a ‘catastrophic’ situation.

“Construction has the worst payment delay of any industry,” they said in a post.

“About 12% of construction companies are more than 60 days past due with their suppliers.

“The risk is that the construction will collapse in a cascade, creating a chain reaction of bankrupt businesses. This could have a serious impact on Australia’s economic recovery.

A news.com.au creditor has already spoken, Nick Mihajlovic, has been waiting for more than three years for a payment of $480,000 from Snowdon for its masonry work.

Since 2019, he has been asking to be paid for the work he did and the materials he bought for Snowdon.

“I’m financially ruined,” he said. “I’m 67 and I have to keep working… I have to earn money, all my debts to pay.”

Michael Hassan’s company, MD Demolitions, is one of 15 creditors who sued Snowdon in the Supreme Court after waiting more than a year for repayment of $103,000 owed.

Mr Hassan, with three young children to support as well as 30 staff who work for him, has been to the Keilor Park office in Snowdon six times to try and get his money.

“There was no money in the account to feed the family or pay the workers,” he told news.com.au earlier this week.

He refuses to work for them until his debt is paid.

A third contractor who spoke to news.com.au, John*, said he has mainly had to wait between 45 and 60 days for Snowdon to pay him since he started working with them in 2019 .

But for eight months he has been waiting for the $30,000 owed to him and said any builder taking more than 90 days to pay a subcontractor was a “red flag.

“Then when it starts to stretch to 90 days, we stop working for them,” he said.

“We pulled the pin because the signs show us there might be some issues, unfinished business, when you start hearing that it’s time to stop.”

There have been 765 credit inquiries on Snowdon over the past five years, but 564 of them have been successful in the past 12 months.

A commercial agent – a debt collection agency with a commercial agent license – also checked Snowdon’s credit history. This type of inquiry left a mark on Snowdon’s credit report.

The trade inquiry was filed on June 20, the same day news.com.au first revealed that Snowdon appeared to be on the brink of disaster.

Casabene Plumbing filed an initial lawsuit against Snowdon in April after the builder failed to pay the $38,000 they were owed.

The plumbers began to terminate proceedings against Snowdon and although the construction company quickly paid off the debt, 14 other creditors had by then joined the case.

Court documents show East West Roofing have asked to appear at the hearing because they owe $936,192, while Home & Industrial Soil Test Pty Ltd wants $685,255 to be reimbursed.

The Office of State Revenue owes $262,444.54, Tamar Cabinets wants $174,348, and then MD Demolitions claims to be entitled to $103,096.

Other creditors include Just Metal Roofing, Dahlsens Building Centres, Waco Kwikform Limited, Top Cat Installations, Mitek Australia, Bingo Waste Services, Aria First Homes and On Trax Earth Moving, whose sums owed range from $24,000 to $91,000. .

Two people also owe $11,511.83 who joined the case.

Other creditors who have not yet joined the lawsuit include Jumbocorp, claiming Snowdon owes them $54,158.50 in unpaid payments, and Specialized Plumbing Drainage Roofing, claiming to owe $102,398.82.

In total, of those creditors, Snowdon owes more than $2.5 million.

Pivot Construction Group, a sister company to Snowdon with the same directors and staff and registered in the same location on ASIC files, also has two defects registered and a lawsuit filed against it.

Wilson Plumbing Bendigo sued Pivot in late May for a $39,000 default judgment hearing.

It is understood that some of the money Snowdon and Pivot owe creditors has already been repaid after facing court action including at the State Revenue Office and Casabene Plumbing.

Ace Fencing & Outdoor Constructions also went into default against Snowdon in August last year, but it is understood their debt of $19,000 has been settled.

Bestbar was another creditor suing Pivot for $111,000, but that money was also paid.

Snowdon says other expenses can be paid after July 4 once they have sold a property.

The next hearing for the liquidation order will be on July 13.

News.com.au has made repeated requests for comment from Snowdon.

Logan*, a current employee of Snowdon, said the company owed large sums to at least 50 suppliers who were now all refusing to do business with them.

“There’s a list, it’s a long list,” he told news.com.au earlier this week. At least 50 vendors are not completing Snowdon work in hopes of getting paid, he added.

Snowdon staff are plagued with problems on all sides, according to Logan, with colleagues being accosted by angry creditors or customers.

“We have trucks parked in the parking lot blocking our cars so we can’t get out because they [the tradies] have not been paid,” he explained.

More than 50% of staff have resigned in recent months, with the company shrinking from 70 employees to just 30 remaining.

The retirement pension in particular was one of the reasons for the mass exodus of staff, with some staff saying they had not received super payouts since October last year in another sign of Snowdon’s financial trouble.

Logan, who has been with the company for several years, said staff learned several months ago that he was not receiving the money that was supposed to go to his retirement pension.

Although it looked like supers were being deposited according to their payslips, a staff member walked into their pension fund and realized that no money was going into it. They then alerted the others.

“Then we asked [the company and it] confirmed that no super was paid. And then nothing has been said about it since,” Logan said.

News.com.au has seen a document which confirms that Logan has not received a super contribution from his employer since October.

Australia’s construction industry is in crisis, with many companies going into liquidation so far this year due to rising building material costs and ongoing supply chain issues, putting them out of business .

Two major Australian construction firms, Gold Coast-based Condev and industry giant Probuild, went into liquidation earlier this year.

Smaller operators like Hotondo Homes Hobart and Perth Home Innovation Builders and New Sensation Homes businesses, as well as Sydney-based company Next have also collapsed.

Late last month, two Queensland businesses collapsed within days of each other, Pivotal Homes and Solido Builders.

And last Friday, news.com.au reported that Victorian building society Waterford Homes had appointed liquidators.

An industry insider told news.com.au earlier this year that half of Australia’s construction companies are on the brink of collapse as they are insolvent.

There are between 10,000 and 12,000 home building companies in Australia undertaking new homes or major renovation projects, a figure estimated by the Association of Professional Builders.

*Names withheld for confidentiality reasons

[email protected]


Source link

Share.

Comments are closed.