Dozens of current and planned building projects have been left in limbo as the company that owns the Hotondo Homes franchise in Hobart goes into administration.
Key points:
- Revive Financial estimates as many as 80 suppliers and subcontractors, 40 customers, and five employees have been financially impacted
- The liquidator says the company had around $1 million in liabilities, not including amounts that may be claimed by customers
- The company had reportedly been in trouble for some time, and closed its New Town offices in mid-December
Tasmanian Constructions, owned by Craig Graeme Ellis, informed the Australia Securities and Investments Commission (ASIC) last Wednesday that it was winding up.
The company has appointed Jarvis Archer of Revive Financial as liquidator.
“The director advised that despite the company’s contracts being profitable, delays to planning and construction stages, in particular due to difficulty sourcing building materials, meant projects couldn’t progress as planned,” Mr Archer said in a statement.
“Consequently, the company was slower to reach progress milestones and issue invoices, severely impacting cashflow and its ability to continue operating.”
Revive Financial estimates there were as many as 80 suppliers and subcontractors, 40 customers, and five employees financially impacted.
Mr Archer said the company had around $1 million in liabilities, not including amounts that may be claimed by those customers.
“Available assets are being collected and sold, and investigations have commenced into the company’s affairs, insolvency and causes of failure,” he said.
Katrina Phillips is one of those 40-odd customers impacted.
Ms Phillips was building a home with Hotondo in Magra, near New Norfolk, and paid the company $64,000 just a month before it went into administration.
“There’s not even a power point in the place, there’s no bathroom done, there’s no carpet or tiles done anywhere … the ceiling on the verandah hasn’t been done.
“It’s just horrific. Absolutely horrific.
Ms Phillips lost her home to arson in late 2019, and signed a contract with Hotondo the following year.
The build was supposed to be complete by November 2021, but the project was hampered by delays.
She tried to delay payment until the build reached a certain stage, but after repeated phone calls from Hotondo, she gave in.
“I’ve spoken with the liquidator, and he told me there’s not even enough money to pay the creditors.”
Without repayment from Hotondo, she fears her new home will remain incomplete.
“If I got that money back I’d be fine, I’d be able to go ahead,” she said.
‘They told me we’d have no issues with money’
The company had reportedly been in trouble for some time, and closed its New Town offices in mid-December — a week or so after Katrina Phillips sent payment.
A contractor working for the company — who did not want to be named — was working on four separate incomplete builds with Hotondo when he was told they had gone into administration.
“About $78,000 I’ve lost,” they said.
“Prior to Christmas we had a few issues with payment from a few jobs. I’ve made a few calls, but they told me we would have no issues with money.
“We were pushed to do another few jobs before Christmas and bent over backwards to do jobs for them.
“Then I found out through friends that it had closed up before anyone had told me.
‘Be very careful with your estimating’
Master Builders Tasmania executive director Matthew Pollock said the industry as a whole had been under strain.
“The last 12 months has been characterised by a period of peak demand, driven by HomeBuilder grants, and both state and federal governments [are] putting a large responsibility on the building industry to lead the economic recovery,” he said.
“It’s coincided with a very challenging period for businesses with supply chain disruptions, material price increases and trade shortages.
“That combination, coupled with, particularly in the residential building sector where you have fixed-price contracts, can be a toxic mix for some businesses.”
Mr Pollock said there were a number of current fixed-price projects that have seen significant increases in costs in the time between signing the contract and the commencement of work.
“It’s important to be very careful with your estimating,” he said.
“The advice that we’re giving to members is to take on a reasonable amount of work, and don’t overleverage.”
In late December, the Tasmanian government announced it would reintroduce home warranty insurance, which covers customers in the event their builder dies, disappears or becomes insolvent.
in 2008, Tasmania became an outlier in the country by removing the mandatory insurance.
While the reintroduction of this protection comes too late for those affected by the wind-up of Hotondo Homes, Mr Pollock believes it is well overdue.
“There are mandated insurance schemes in every other jurisdiction in Australia,” he said.
“In terms of where we are with the amount of work underway, and given recent business failures, it’s an appropriate time to review those models and introduce protections for Tasmanians wanting to build that dream home.”
The administrator’s first report to Tasmanian Constructions’ creditors will be issued in the coming week.
