Low-rise Taranaki St apartments at The Paddington. Photo / Supplied
Low-rise Taranaki St apartments at The Paddington. Photo / Supplied
The first glimpse is out of the scale of debts owed by big Wellington builder Armstrong Downes Commercial after liquidators released their first report showing an $8.7 million shortfall.
Earlier this week, the builder which worked on school projects and one of the city's largest apartment developments wentinto liquidation, resulting in security guards being posted at the residential site which today stands silent.
Liquidators said yesterday the company had $17.6m liabilities but just $8.9m in assets and 320 unsecured creditors claiming $9.2m.
Tony and Erica Doile and Simon Taylor are shareholders in Armstrong Downes Commercial 2012. They put their company in the hands of David Ruscoe and Russell Moore of Grant Thornton. One worried subcontractor called Newstalk ZB saying he is owed $30,000.
The builder had eight projects, estimated to be worth at least $80m.
Creditors include Hirepool, the Wellington City Council, EnviroWaste Services, Thermosash, Site Safety, Genesis Energy, Just Water, Carters, Bunnings, Fairfax Media (Dom Post), PlaceMakers, Resene Paints, Phoenix Elevators, Mitre 10 Mega Petone, Canon New Zealand, OfficeMax, Firth Industries and Schindler Lifts.
The Hutt Valley-headquartered company worked throughout the Wellington region for the past 20 years and did many jobs for the government.
Hutt Valley High School's $8.6m redevelopment, Chilton St James and Karori West Normal School were education projects the business listed among its achievements.
Ruscoe and Moore said two of the company's largest projects were suffering substantial losses due to being fixed price in this economic environment. Spiralling costs, procurement challenges and labour shortages were cited as issues.
The builder was working on the Frank Kitts' park project on the waterfront. Photo / Supplied
After an attempt at restructuring contracts, shareholders decided calling in liquidators was in the best interests of customers, subcontractors and others to reduce further losses, the liquidators said.
"It's a surprise," one sector leader said of the liquidation this week.
"It happened fast and it's a reflection of the unstable market. Everyone is busy, but the pressures at the financial end to make sure these things are still delivering."
Rick Herd, Naylor Love chief executive, said subcontractors might be able to take some comfort from the fact the building jobs will need to be completed.
The builder worked on Brandon House in Wellington for Robt. Jones. Photo / Supplied
Although that won't be under Armstrong Downes' watch, others could step in, Herd said.
"Because the developers will want to finish their projects the subbies are likely to get paid so long as they can negotiate appropriate terms with the receiver/developer to finish," Herd said.
"The liquidators/developer will need to negotiate with the existing subbies for the sake of cost, continuity and liability in respect of warranties and guarantees."
The liquidators said in yesterday's initial report that no creditor meeting was proposed. They also declared the builder has performance bonds relating to a number of sites. Multiple parties had already called on those bonds and they were reviewing the position
Retentions were held in a separate account.
Building materials were on a number of sites and the liquidators said they would work with the builder to understand the ownership of those materials. Once confirmed, all company owned materials will be sold.
All construction sites had been temporarily closed to protect assets.
That had allowed the liquidators time to assess options for each of the sites.
The liquidators said they would work with subcontractors and creditors to return their assets in an orderly fashion. That process had started and most subcontractors had recovered their tools and equipment from the different sites.
