More builders face collapse

Construction industry in turmoil

The building industry carnage continues in Queensland, where a pipe-laying contractor and plumbing firm owing millions of dollars has appointed administrators.

Civforce Civil Pipelaying is being wound up by liquidator Leon Lee, of Morton Lee Insolvency, owing creditors $2.4m after accumulating heavy losses on residential estate projects in southeast Queensland.

Separately, Gold Coastbased Obsidian Plumbing has appointed administrators after accumulating debts of more than $500,000 to the Australian Taxation Office.

Founded in 2016, Civforce Civil Pipelaying undertook numerous projects laying underground piping for new housing estates and developments in southeast Queensland.

In a report lodged with ASIC, Mr Lee said in excess of $1m in losses were accumulated by the company indicating it did not have enough working capital to meet its liabilities.

“From my preliminary investigations, it appears the company has been insolvent since at least early 2022,” Mr Lee said in his report.

“Numerous creditors had commenced legal proceedings against the company and there was a lack of available funds to cover trading losses and working capital for the company moving forward.”

According to the report, the ATO is owed $787,755 while subcontractors and other suppliers are owed about $800,000.

Obsidian Plumbing, whose motto was “laying pipe since 2005”, has appointed David Stimpson, of SV Partners, as administrator.

According to a report lodged with ASIC, the company owes the tax office $609,569.69.

Obsidian employed about 60 people working on commercial, residential and multiunit developments, mining and civil infrastructure. Comment has been sought from both Civforce and Obsidian Plumbing.

Earlier this week, Melbourne-based CDC Plumbing and Drainage collapsed, owing $7.1m due to Covid-19-“induced stress” within the building and construction industry.

According to data from analytics and technology company Equifax, construction sector insolvencies continue to increase across the country.

Its latest Quarterly Commercial Insights revealed that nationally construction insolvencies were up 94 per cent in their first three months of 2023 compared with the same quarter in 2022.

Furthermore, according to Equifax, 27 per cent of construction businesses had a credit rating downgrade in the first quarter of 2023, compared with only 9 per cent in the same period of 2022.

The residential sector was the hardest hit, with downgrades of 33 per cent of homebuilding businesses, followed by 32 per cent for commercial building companies and 23 per cent for civil and infrastructure construction businesses.

In a report released this week, the Australian Construction Industry Forum said insolvency in builders was on the rise.