Sub-contractors affected by a prominent local building company’s financial woes appear set to receive some monetary relief.
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Edwards Constructions (NSW) Pty Ltd - which was building the new Bellambi Bunnings - went into administration in October.
An administrator at the time estimated that the company owed “between $4 million and $6 million of creditors”.
More than 200 creditors are reportedly affected.
However, the building contractor will emerge from administration after having secured the support of creditors earlier this week for a proposal for directors to maintain $3.3 million in ongoing support.
Under the proposal, known as a deed of company arrangement (DOCA), sub-contractors and other unsecured creditors will receive payments from the sale of company assets and proceeds of an insurance claim.
Although not wanting to reveal cents-in-the-dollar figures, administrators Michael Slaven and Aaron Torline from Ernst & Young reviewed and recommended the proposed DOCA on the basis, “that it provided for a substantially greater return to creditors then would be achieved if Edwards Constructions were placed into liquidation”.
The company will be returned to the directors and the arrangements to settle creditors’ claims will be managed by the current administrators.
Mr Torline told the Mercury in October that the company went into administration “as they were experiencing cash flow issues”.
“This arrangement will keep people in work, it will keep our projects going and it will put the company in a position to rebuild,” Edwards Constructions’ managing director Sam Edwards said.
“I know many subcontractors have had to drastically change their businesses following my company’s problems.”
Edwards Constructions has been in operation since 1981, and has completed a number of high-profile Illawarra developments, including the Wollongong Courthouse and Shoalhaven Entertainment Centre.
Mr Edwards said that earlier this year, a concrete pour collapsed on an Edwards Constructions project in Bonnyrigg.
He said while no one was injured, the incident had a “catastrophic” impact on the business, leading to the appointment of administrators.
“I really regret that some have been left without full payment for their hard work and have only had a choice between a set of unsatisfactory options,” he said.
“The rebuilding process will ensure that those risks that came to bear in these past couple of years will be mitigated through better practices, learning and keeping an eye out for those kinds of risks.”
A contractor who did fencing work for the Bellambi Bunnings, Michael Coleman of Colemans Group, had previously estimated they could be facing a debt somewhere between $68,000 and $170,000.
“Even though we still take losses on, (the proposed figure) is probably the best I’ve heard of in the past couple of decades of trading,” he said.
“If they deliver what they’ve said, it’s a good result.”
