By ANNE GIBSON
Two Auckland commercial construction firms have gone under, owing more than 1250 creditors at least $5.2 million.
GFF (formerly Equinox Construction) and Tauran Construction have been put into liquidation after financial and project difficulties.
Subcontractors - burned by last year's $20 million collapse of Goodall ABL - are again hit the hardest.
GFF tried to get money from overseas to help it, but failed, while Tauran was caught by the failure of some companies it was working for.
"The industry is in a shambles," said Geoff Bayley, a building disputes arbitrator of Auckland. He is one of many pushing for legislation to protect subcontractors.
Associate Minister of Commerce Laila Harre is backing the move and National MP Nick Smith has already drafted the Construction Contractors Protection Bill.
But this will not save the subcontractors and suppliers who are unlikely to get any money out of the companies.
The sorry state of the commercial property market is being blamed for the failures, combined with the leadup to Christmas and the need to sort matters out with staff.
GFF tried to hold off the inevitable by proposing a scheme of arrangement to its creditors late last year but they rejected this.
GFF owes about 250 creditors $3.1 million, according to accounts presented to liquidators Vivian Fatupaito and Richard Agnew of PricewaterhouseCoopers.
Tauran's books show it owes about 1000 creditors $2.1 million. It is also in the hands of PricewaterhouseCoopers, with Vivian Fatupaito and David Davidson in charge.
Tauran went into liquidation on December 20 and GFF a day later.
"Coming up to Christmas, there's more obligation on shareholders and directors, being concerned about staff and holiday pay," Vivian Fatupaito said, referring to the timing of the liquidation.
The liquidators expect to spend many months sorting out the mess.
GFF was set up in April 1998 while Tauran started as a civil engineering firm in November 1986.
The liquidators were reluctant to specify the jobs the firms were working on, as they said this could prejudice payments expected on the work.
But investigations show that GFF was to have built a high-rise apartment block, Number One Hobson, on the corner of Hobson and Fanshawe S. It has already built the first stage of Redwood Group's Eden Village.
Tauran's work included building a new school, Zayed College for Girls, at 44 Westney Rd in Mangere, as well as work on a building on Auckland's waterfront.
Negotiations are under way to get retention payments, or money held until construction jobs were finished.
On the positive side of the ledger, Tauran is owed $800,000 by its debtors and GFF is owed $480,000.
Retentions of about $500,000 are also due to Tauran from its projects.
Vivian Fatupaito said GFF stated it had no employees at the time of liquidation, while Tauran had about six. Holiday pay and wages were due to Tauran staff.
GFF's directors and shareholders are Chong Du Cheng of Manurewa, Rex Chien-Hsiang Huang and Robert Chao-Chun Yu.
Tauran's directors and shareholders are Garry Coleman of Karaka and Christopher Smith of Greenhithe.
GFF failed because of problems on its jobs, a liquidators' report said.
"The company suffered significant losses on several construction contracts and as a result has not traded profitably. The company also anticipated that it would receive a further injection of funds from its overseas shareholders, which it did not receive."
Tauran's problems were put down to others not paying: "The company's financial position has suffered due to significant bad debt writeoffs during the last two to three years."
Tauran was caught by the collapse of Graeme Raymond's First Investments two years ago, and the failure of projects by apartment developer Mark Bryer.
Potential breaches of law by both companies were yet to be investigated, the reports said.
Tauran's bank, the ANZ, holds a debenture over the company, as do five people, including directors Christopher Smith and Garry Coleman.
Unsecured creditors were unlikely to get any payments from either company. If they did, at best it would be only 20c for every dollar owed, the liquidators said.
If a dividend is paid, it will be by May 22 for GFF and May 15 for Tauran.
Creditors owed $5m in collapse of construction companies
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