Melbourne builder folds owing millions to 100 tradies

The collapse of yet another Victorian building company , Kleev Homes, has underscored the dramatic plight of the industry in the state.

The construction sector in Victoria has seen insolvencies surge by a massive 74 per cent in the past year.

Kleeve Homes’ demise has left creditors owed $3.3 million and proven another kick in the teeth for around 100 smaller subcontractors owed as much as tens of thousands of dollars.

According to a notice published by the Australian Securities and Investments Commission (ASIC), the decision to wind the company up was made at a general meeting of its members on 5 July. Travis Pullen of insolvency firm B&T Advisory has been appointed liquidator.

The latest data from ASIC indicates 619 building companies in Victoria collapsed over the past year, a figure that is rising on weekly basis.

“Kleev Homes ceased traded shortly prior to my appointment, with five uncompleted projects across Melbourne,” Mr Pullen told media.

“The focus on my initial investigations is ascertaining what assets may be available for the benefit of creditors, including outstanding employee entitlements. 

“I am yet to complete my investigations regarding the reasons for the company’s failure, but as many will be aware the residential construction industry has struggled with the pressures of dealing with rising costs and labour shortages, resulting in fixed price contracts becoming unprofitable.”

ASIC revealed the company owed its debts to 162 unsecured creditors. The Australian Taxation Office was owed $262,000 and another $707,000 to Westpac. 

Creditors would have to wait until a report is issued on 5 October outlining how much, if any, creditors will be paid.

The company had accrued its share of accolades but they were no protection against the difficult operating environment builders find themselves contending with.

Kleev Homes had won Young Master Builder of the Year, MBAV Best Custom Home $800,000–$1,000,000 and HIA South East Victoria Best Custom Home awards since it was founded in 2006 in Beaconsfield Upper.

Only a day earlier, it emerged that boutique Melbourne construction company Avra Group, based in Footscray, had entered into administration.

The pace of construction cost increases has slowed but not reversed.

The woes besetting the building industry are national in scale.

According to ASIC’s insolvency statistics, New South Wales had even worse figures than Victoria, with a staggering 91 per cent increase in construction insolvencies, totalling 981 companies.

High profile builders in Western Australia have also taken a hit in recent weeks.

Master Builders Victoria’s Chief Executive, Michaela Lihou, said she anticipated more company failures in the coming months but maintained that the industry as a whole remained resilient.

“While we’re alert to the recent spike, we’re not alarmed,” she told media.

“It’s less than 1 per cent of the businesses in the Victorian building and construction industry that have gone insolvent.”