News on the failure of Consolidated Constructions just gets worse for creditors, while tabling of the Construction Contracts Bill could lead to a better deal for builders and subcontractors.
MULTIPLEX has taken over Consolidated Constructions’ main project as estimates of the failed company’s debts have blown out to as high as $20 million.
Administrator Gary Anderson told a creditors committee last week the debts are likely to be higher than his initial estimate and the payout to unsecured creditors is likely to be substantially lower.
The creditors meeting also featured some spirited discussion about whether Mr Anderson should investigate pursuing Consolidated’s directors for possible insolvent trading prior to going into administration.
Decisions were deferred until the next full creditors meeting, due next week.
Mr Anderson initially estimated the company’s debts to be about $12 million and said the shortfall would be about $5 million.
He now believes the debts will range from $13.5 million up to about $20 million.
The wide range reflects the probability that project proponents will seek compensation to cover cost increases and delays.
The estimated payout to unsecured creditors has fallen to a range of 18 to 22 cents in the dollar.
Consolidated was working on at least six major projects in Perth and further projects in Sydney when it was placed in administration early this month.
Consolidated’s biggest contract, the RAC’s new head-quarters on Wellington Street, has been taken on by Multiplex, which ranked second in the original construction tender.
The project, with a total value of $32.8 million, is being managed by ING Real Estate and Lewis Land.
ING development director Greg Boyd said he would be lodging a claim with the administrator for any increase in construction costs.
He said Multiplex was able to move quickly because it was familiar with the project and very little work had been completed.
“We are trying to mitigate the difference in price by moving quickly,” Mr Boyd said.
He added that the price to be paid by RAC would not change.
Consolidated’s other projects include new railways stations at Armadale, which is largely complete, and Gosnells.
Consolidated has largely completed the $11.3 million Gosnells Civic Complex and is advanced in its work on the $10.3 million redevelopment of Osborne Park Hospital.
It is also working on the Sorrento Beach redevelopment.
The company’s directors placed Consolidated in administration on Tuesday March 2.
Consolidated was one of Perth’s largest commercial construction companies and had operated successfully for more than 40 years.
A major contributor to its demise was the loss of about $4 million on the David Jones redevelopment.
