Fight looms after company fails
Mat Alexander’s company, Plumbuilt, is owed more than
$600,000 after the collapse of Stanley Group, the latest in a line of big-name construction companies to go belly-up.
Alexander believed Plumbuilt was the largest of the subcontractors on Stanley Group projects, which was put into liquidation on September 5 after a vote by shareholders.
‘‘Yes, we have taken a hit. ‘‘Yes, it is going to suck,’’ Alexander said. ‘‘And if we took another hit, we would survive it, but we are very concerned for the smaller guys who can’t take this kind of hit.’’
Frustrated sub-contractors to Auckland and Waikato-based Stanley Group, which is understood to owe creditors about
$5 million, are working to build a legal fighting fund to investigate whether there are grounds for taking legal action against the directors of the Stanley Group companies, which collectively employed about 100 staff.
‘‘This is about sending a clear message,’’ said Dave Burt, director of Team Cabling, which was also a sub-contractor to Stanley Group.
‘‘People are saying: We have had enough,’’ said Burt, who was co-ordinating the raising of the fighting fund, and had even had offers of financial backing from interested trade industry bodies.
One of Stanley Group’s projects was to build homes for Housing NZ in Mangere in Auckland, and Alexander believed the Government needed to take steps to reduce unnecessary hazards to doing business for small and midsized sub-contractors.
He would like to see a law change, including treating all debts to sub-contractors of a failed construction company as secured against any building materials and products the subbies had on site.
He would also like to see all sub-contractor ‘‘retentions’’, which is money from subcontractors held by construction companies as a guarantee their work is sound, held in government-managed trust accounts in a scheme similar to the residential tenancy bond scheme.
It is only since 2017 that the law was changed requiring retentions to be held ‘‘in trust’’ following the Mainzeal collapse when subcontractors missed out
on $18m worth of retentions but there are continued concerns this was not always happening.
‘‘We could definitely solve all of this,’’ said Alexander, who also favoured changes in practice, including having project leads like Housing NZ paying subbies directly, with construction companies merely managing projects.
‘‘As of today I am owed in excess of $600,000 from Stanley’s collapse,’’ said Alexander.
‘‘A lot of my money is sitting on site uninstalled, or able to be removed easily, and credited back to my suppliers. I am not allowed to do this and will have to leave it there so it can pay the secured creditors.’’
This included 47 hot water cylinders and valve packs worth $1000 each.
‘‘This is wrong,’’ he said. Burt said some subbies’ tools and equipment were locked up on Stanley Group work sites, and so they no longer had access to the tools of their trade, which they needed to continue earning, and supporting their families.
Alexander said the Government should work to ensure subbies working on government contracts, like Stanley Group’s development of Housing NZ homes in Mangere, a development on which Plumbuilt was owed money, should not face unacceptable commercial risks they couldn’t protect themselves from.
‘‘I am pulling people off the dole, and out of school to put them through apprenticeships,’’ Alexander said. ‘‘I am building houses for people who are less fortunate. It matters. We are trying to build trades. If I pull the pin on 50 staff in Auckland and 10 in Tauranga, there is a ripple effect.’’
If subbies did not have fair protection, it could have a dampening impact on construction as some might choose not to run the risk.
‘‘It is making me look at what I am doing, and making me ask if it is worth it,’’ he said.
Burt believed current construction laws were largely good but that there needed to be more enforcement, including by subcontractors clubbing together to take action.
Collapses needed to be investigated, and if directors were found to have traded while their companies were insolvent, or who had traded recklessly, then they should face legal action.
‘‘Directors must be held to account,’’ Burt said. ‘‘What this is about is getting a bunch of subcontractors together, and I am pretty confident that we are going to get a decent fund together.’’
Stanley Group’s managing director, Kevin Stanley, said he could only talk to liquidator Damien Grant at this time. Other Stanley Group directors could not be contacted.
In July, former prime minister Dame Jenny Shipley, and other Mainzeal directors, failed in a bid to overturn a total of $36m in damages ordered against them in a case taken by the liquidators of Mainzeal.