Sydney construction firm Next has reportedly entered voluntary administration, as its owner seeks a deal with creditors to avoid total collapse.
The Australian reports Next, focused on aged care and student accommodation buildings, is the latest constructor to falter under sky-high material and labour costs and COVID-19 delays.
The firm has recruited administrators Hall Chadwick to handle its operations, as it works to resolve some $15 million in unpaid debts.
Speaking to the paper, Hall Chadwick partner Sule Arnautovic says some $5 million of that total is owed to unsecured contractors and creditors.
But Arnautovic says Next director, Joseph Di Girolamo, was attempting to avoid liquidation by brokering a deed of company arrangement with creditors.
If successful, the move could allow Di Girolamo to oversee the completion of Next’s current projects, amend defects, retrieve payments, and reimburse employees, Arnautovic says.
The precise structure and future of Next’s operations past that point is unclear, he added.
The proposal is expected to reach creditors within the next six weeks.
https://www.instagram.com/p/CQpZ7zjFUuU/?igshid=YmMyMTA2M2Y=
By entering voluntary administration, Next has joined the ranks of major builders like Condev and Probuild, and a growing number of home constructors in WA, all of which have collapsed in the early months of 2022.
While the precise cause of each downturn varies, Arnautovic told The Australian sky-high material costs, wage pressures, and the crushing cost of COVID-19 delays took a toll on Next.
New Performance of Manufacturing Index (PMI) figures from the Australian Industry Group highlight the pressures facing local constructors.
Its index of construction materials, including timber, bricks, and glass, rocketed up 9.6 points in April alone. The index now sits at 70.6 points for the month, where any reading above 50 represents growing costs.
“Skilled labour shortages, rising labour costs and supply chain disruptions remain the principal constraints on manufacturing,” Ai Group said in its report.
“These pressures increased in April and remained at all-time highs for the Australian PMI series.”
Senior Business Journalist
Focused on the small business sector, David’s work covers the political, regulatory, and economic issues facing Australian entrepreneurs. Prior to joining SmartCompany, he was a reporter for Business Insider Australia. You can follow him on LinkedIn.
Comments