Perth commercial builder Mercedes Construction has tumbled into liquidation after moving to wind up its operations.
Perth commercial builder Mercedes Construction has tumbled into liquidation after moving to wind up its operations.
It comes two months after Mercedes Construction’s sole director Adrian Gagiero voluntarily appointed administrator Ross Thomson from Bankruptcy Advisory Centre.
A filing with the corporate regulator reveals Mercedes Construction passed a special resolution to voluntarily wind up its operations at a meeting on Tuesday.
An early-stage revival bid was lobbed by Mercedes Developments, an entity which shares several shareholders with Perth luxury homebuilders Zorzi Builders, to potentially buyout Mercedes Construction.
That high-level outline of a deed of company arrangement, which proposed to waive debts and provide a $250,000 cash top up, was not recommended by the administrator.
It appears Mr Thomson will continue to run a ruler over Mercedes Construction, now acting as a liquidator for the collapsed building company.
Mercedes’ troubles were pinned on increased costs for materials, equipment and labour, coupled with project losses which led to reduced performance.
Among the "premium developments" the builder was contracted for was 110 Marine Parade in Cottesloe, a seven-storey luxury apartment project. But that contract, valued at $16.6 million, is expected to be terminated, according to an administrator’s report.
Mercedes was also the contracted builder for the five-storey luxury apartment complex at 331 West Coast Drive, the old Yelo Café site in Trigg.
According to the administrator’s report, Mercedes was served a termination notice for that contract valued at $8.8 million, with the developer appointing a new builder.
Now-collapsed Mercedes Construction, established in 2013, has a complex ownership structure.
Entities which own Mercedes Construction share a handful of shareholders who also have a stake in luxury Perth homebuilder Zorzi Builders.
The two Perth-based builders are not connected financially, according to Zorzi, instead through the mutual shareholders. Mercedes, however, claims to be part of the Zorzi group of companies on its now-defunct website and LinkedIn.
Mercedes Construction is 65 per cent owned by an entity named Mercedes Developments, which is then owed by an entity called Western Alliance.
Western Alliance has multiple different shareholders, which include four shareholders of Zorzi Builders, according to a statement from Zorzi Builders in July.
Mercedes Construction’s sole director is Adrian Gagiero, whose family technically owns other 35 per cent of the company.
Upon Mercedes Construction tumbling into administration, Zorzi Builders moved to distance itself from the company, saying it was “financially healthy and continues to operate as business as usual.”
Further, the Zorzi spokesperson said Mr Gagiero appointed an administrator without consulting the other shareholders, and that it would work with the administrator to resolve the issue and enable to Mercedes to get back to business as quickly as possible.
The high-level outline of a DOCA submitted by Mercedes Developments proposed to takeover Mercedes Construction, waiving debts and contributing $250,000, and remove Mr Gagiero as a director.
The proposal listed goals, one of which was to "eliminate any doubts that MC [Mercedes Construction] reflects the character of MG [Mercedes Group], its directors, and shareholders, who have collectively worked together for over 27 years in this 67-year-old industry leading brand."
According to the administrator’s report, Mercedes Construction has loans with both Mercedes Development, and Mercedes Group- a related entity.
In a statement today, Mercedes Developments said as a shareholder in Mercedes Construction, it did propose a high-level outline of a deed of company arrangement, but that it couldn’t formalise a proposal due to time constraints and insufficient information on the builder’s affairs.
“Moving forward, Mercedes Developments Pl retains the ability to negotiate with the liquidator regarding the purchase of any Mercedes Construction assets or business components,” the statement read.
“We are also committed to ensuring that all reasonable attempts are made to maximise returns for creditors, including the pursuit of various debts and claims.
“Our focus now is on cooperating fully with the liquidation process, including submitting the necessary proofs of debt and supporting the liquidator's efforts to recover any amounts due to Mercedes Construction.
“We remain committed to transparency and will continue to provide updates as the situation progresses.”
The liquidator declined to comment.