Liquidation of Snowdon Developments: Hundreds of homes threatened

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An Australian construction company has collapsed before $18 million to 250 creditors, with 52 employees made redundant and more than 550 homes at risk of not being completed.

A court ordered Victorian building company Snowden Developments to go into liquidation on Wednesday morning – and comes just weeks after the builder went into administration over fears it could not pay its debts.

“I am satisfied that orders have been issued for the defendant to be placed in bankruptcy,” court clerk Kim Woronczak said.

The decision to liquidate it came after contractors and suppliers went months without being paid and construction projects remained untouched.

Fifteen creditors sued the company in April over the $2.5 million owed to them in a bid to liquidate the company due to insolvency.

But the three-month delay in reaching a decision has left many creditors facing financial ruin, the court heard.

Australian construction company Snowden Developments has collapsed due $18million to 250 creditors, with 52 employees laid off and more than 550 homes at risk of not being completed

Fifteen creditors sued Snowden Developments in April for the $2.5 million owed to them in a bid to wind up the company due to insolvency.

Fifteen creditors sued Snowden Developments in April for the $2.5 million owed to them in a bid to wind up the company due to insolvency.

Others said they missed the previous government’s $15,000 to $25,000 grant for homebuilders because work hadn’t started in time to qualify.

“We say an extreme delay has harmed the supporting creditors,” Danny Didone of Wyndham Law Offices said in court on Wednesday, reported news.com.au.

“Snowdon should have been in a position months ago to realize that this company should have been liquidated, not three months after these proceedings began.”

Three former Snowden clients each owe more than $1 million, the court heard, while Australia’s tax authorities are also demanding $4 million in unpaid tax.

The court was told that 252 customers had paid a deposit but no work was ever carried out, while another 268 construction works were in progress at the time of the Snowden accident.

Mira Vose and her husband Anthony were left with only the concrete slab and a wooden frame nearly 18 months after construction began.

Contractors are also among the creditors, including Michael Hassan’s MD Demolitions, which is claiming $103,000 for work that has been unpaid for six months.

“There was no money in the account to feed the family or pay the workers,” he said.

“It’s just sad, I went to the office, I said ‘I’m desperate, I need the money’.

“If I didn’t have financial backing behind me, the bank would have already taken my property.”

The decision to liquidate it came after contractors and suppliers went months without being paid and construction projects remained untouched.

The decision to liquidate it came after contractors and suppliers went months without being paid and construction projects remained untouched.

It is the latest construction company to shut down during the pandemic, with many struggling to find staff and facing problems sourcing and paying for materials due to a global shortage.

Matthew Mackey, chief executive of engineering giant Arcadis, said the government had to get more involved or face a total collapse in the homebuilding industry.

“There needs to be more collaboration at all levels to make sure this moves forward. We’re not going to talk about builders going bankrupt but a complete lack of jobs,’ he told Daily Mail Australia.

Soaring material costs, strangled supply chains, rising fuel and vehicle prices, difficulty in finding staff and high wages were combining to destroy the viability of businesses.

Snowden is the latest construction company to shut down during the pandemic, with many struggling to find staff and facing issues with supplies and payment for materials due to a global shortage

Snowden is the latest construction company to shut down during the pandemic, with many struggling to find staff and facing issues with supplies and payment for materials due to a global shortage

Skyrocketing material costs, strangled supply chains, rising fuel and vehicle prices, difficulty finding staff, and high wages were combining to destroy business viability.

Skyrocketing material costs, strangled supply chains, rising fuel and vehicle prices, difficulty finding staff, and high wages were combining to destroy business viability.

Personnel costs have also skyrocketed, with some in-demand trades and specialists being hunted by rivals for double their previous pay.

The industry was also hit by delays caused by Covid shutdowns and then La Nina deluges halted work at sites in the eastern half of the country for weeks.

Today, companies across the country are locked into fixed-cost contracts that cost them money at the fist.

Worst hit are large companies with sales teams that have taken in record volumes of business at prices they can’t afford, with profits crushed by rising costs.

Small businesses have also been bitten but are better protected as they have pledged to cut jobs and are more likely to be able to cover their losses.

Others are renegotiating the cost of contracts before starting work to account for changes in the economy and offering customers their down payment if they choose not to proceed.

Some unscrupulous builders start work on fixed-price projects, only to stop halfway and hold families to ransom to complete the job.

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