The former office of Clan Construction Ltd in Hillside Rd, Dunedin. Photo / Gerard O'Brien
The former office of Clan Construction Ltd in Hillside Rd, Dunedin. Photo / Gerard O'Brien
A Dunedin construction company has collapsed, owing more than $2 million and leaving eight projects in limbo.
Rising interest rates and falling house prices are putting pressure on the building sector.
Clan Construction Ltd went into liquidation on March 7, and liquidators Trevor and Emma Laing have been appointed.
Material price increases and supply issues, Covid-19, a lack of profit on contracts, and franchise fee commitments were all listed as reasons for the company’s failure, according to the first liquidators’ report released last week.
It states an estimated $1.29 million is owed in secured debt, while an estimated $893,833.26 is owed to 40 unsecured creditors and a further $50,000 is owed in preferential employee entitlements.
The company directors are former Otago rugby player Brett McCormack, who also holds 40 per cent of the company’s shares, and businesswoman Michelle Macmillan, who holds 60 per cent.
Macmillan was also a former shareholder of the former All Blacks coach Laurie Mains-owned Clan Construction Commercial.
Clan Construction Ltd was incorporated in January 2005 and undertook mainly residential new-builds, initially under a franchise arrangement with GJ Gardner Homes but more recently, independently.
Eight building contracts were left uncompleted at various stages due to the liquidation of Clan Construction Ltd. Photo / Supplied
Eight building contracts at various stages are uncompleted because of the liquidation.
“The liquidators have been liaising with the various parties involved with unfinished contracts with a view to putting arrangements in place that will allow these contracts to be completed,” the report states.
Fellow Dunedin construction company Nashcon Ltd went into liquidation in early February.
Master Builders chief executive David Kelly said the building and construction industries were facing challenges that were being felt across the sector.
Master Builders chief executive David Kelly.
The cost of borrowing was high and, as a result, house prices were falling.
“We understand that it is a highly stressful and emotional time for everyone involved, including impacted homeowners,” Kelly said.
“We have been working with our membership to help them prepare for changing circumstances.
“Unlike with the Global Financial Crisis, where there was a sudden drop in work, this change has been more gradual, which has given people time to prepare.
“It is still unfortunate that some businesses are unable to weather the changing environment.”
For the past five decades, the building and construction sector had traversed an endless boom and bust cycle, which was unproductive and unsustainable, he said.
After the GFC, house building declined by 50 per cent and the residential construction sector lost 25 per cent of its workforce, he said.
That had directly contributed to the housing shortage New Zealand had today, he said.
