Construction firm’s liquidators named as more failures tipped

Wellington construction company Armstrong Downes Commercial (ADC) has gone into liquidation, and there has been a warning that the industry is likely to see more liquidations in the near future.

David Ruscoe and Russell Moore from Grant Thornton New Zealand have been appointed liquidators.

Two of the company’s largest construction projects had been suffering substantial losses as a result of being fixed price in an economic environment of spiralling costs, procurement challenges and labour shortages, the liquidators said.

‘‘Following an unsuccessful attempt at restructuring the company’s contracts, it has been decided the appointment of liquidators is in the best interests of customers, subcontractors and other stakeholders to minimise further losses.’’

The company has eight construction projects in progress throughout Wellington, including the Frank Kitts Park redevelopment on the waterfront.

Armstrong Downes is the head contractor in most cases but its workforce is employed by other Armstrong Downes group companies. No other Armstrong Downes group companies are in liquidation.

The liquidators have taken control of all ADC construction sites, which have been closed for a limited period as liquidators work through options for each project.

‘‘It is important for subcontractors to know we will be returning their assets as soon as practicable, and we will be working with employees from other Armstrong Group companies to facilitate this,’’ Ruscoe said.

Grant Thornton would be contacting all customers and suppliers about its appointment in the next few days.

Kevin Melville, managing director of electrical and mechanical contractors NME, said Armstrong Downes was halfway through a development in Lower Hutt when it went into receivership yesterday. The subcontractors were unpaid, he said.

David Kelly, chief executive of Master Builders Association, said the industry was likely to see more liquidations in the near future.

He said both commercial and residential builders were in a difficult trading position due to delays in building products and increased build costs. Consumer confidence was dropping, particularly in residential property, which Kelly said would likely delay or cancel developments.