Dream home building company collapses owing millions in unpaid debts as owner’s marriage falls apart
A luxury home construction company has gone bankrupt with more than $2 million in debt, blaming poor management, rising construction costs and the breakdown of a marriage.
Residence Building Group, an Adelaide-based housebuilder, was placed into voluntary administration on October 3 after 14 years of trading.
The construction company specialized in building architecturally designed homes, renovations and extensions in Adelaide’s more expensive eastern suburbs.
Administrator Agile Business Advisory released a report to creditors on Monday evening detailing how the construction company, with an office in North Adelaide, was owed almost $2.1 million.
Complicating matters further, the company’s key directors were married but are now divorced, with the founder’s wife owed money for construction work on their family home, the administrator’s report said.
A luxury home construction company has gone bankrupt with more than $2 million in debt, blaming poor management and rising construction costs
Residence Building Group, an Adelaide-based housebuilder, was placed into administration on October 3 after a 14-year trading period
Including the company’s outstanding debts $557,717 to 58 trade creditors outstanding for goods and labor, $726,330 to the tax authorities, $629,775 to unsecured loans and $180,803 to property owners for incomplete work.
“The following summarizes the position of the unsecured creditors, although, as noted below, the value of the unsecured debts is likely to increase significantly,” the liquidator’s report said.
Agile Business Advisory director Leigh Prior said Residence Building Group had suffered from “poor strategic management” at a time of rising construction costs.
‘Based on my research to date, I believe that the main reasons for the failure of the company’s business are difficult trading conditions faced by the construction industry in general, including rising input costs, supply chain delays and a shortage of trading activities,” he said. the report obtained by Ny Breaking Australia.
Mr Prior also cited “unprofitable fixed-price contracts” that had led to “increasing liabilities and an inability to pay debts as they fell due.”
His report also noted that the company blamed the previous coalition government’s HomeBuilder program, which provided $15,000 in grants in 2020 during the start of the Covid pandemic.
‘Factors that the director believes have contributed to the failure of the company’s business include the impact of Covid-19, the pressure the Commonwealth Government’s Homebuilder program placed on the sector, inflation and difficulties arising from a environment with fixed price contracts,” the report said.
Director David Menner founded the company in July 2009 and, together with his estranged wife Leah Menner, owned a 50 percent share of Residence Building Group.
The couple, who have three children, also walked ‘Little City Studio’ with two co-working hubs in Prospect and Unley.
But now Leah Menner – described in the administrators’ report as ‘The director’s estranged wife is owed $240,000 for construction work on the home she co-owned with her estranged husband.
“I have been informed that Ms Menner has subsequently resigned as trustee and that the director is the sole trustee,” the administrator’s report said.
JWNH Enterprises Pty Ltd owned the other half of Residence Building Group.
Director David Menner founded the company in July 2009 and, together with his wife Leah, owned a 50 percent share in Residence Building Group
The construction company specialized in building architecturally designed homes, renovations and extensions in Adelaide’s more expensive eastern suburbs.
Administrator Agile Business Advisory released a report to creditors on Monday evening detailing how the construction company, with an office in North Adelaide, was owed almost $2.1 million.
The housing group had posted losses for two consecutive financial years, with losses of 4,714 in 2021-2022 and 3,901 in 2022-2023.
Losses so far in the 2023-2024 financial year have reached $94,693.
The Reserve Bank of Australia’s 12 interest rate hikes since May 2022 – which took the cash rate to an 11-year high of 4.1 per cent – have coincided with a rise in the number of companies entering administration.
Australia’s major banks – Commonwealth, ANZ, Westpac and NAB – are expecting a rate hike on Melbourne Cup Day next week, which would take cash rates to a 12-year high of 4.35 percent.
Agile Business Advisory director Leigh Prior said Residence Building Group suffered from “poor strategic management” at a time of rising construction costs
Australian Securities and Investments Commission data shows 721 companies entered administration in September 2023, compared to 643 in September 2022, 314 in September 2021 and 298 in September 2020.
During the last financial year, 7,942 companies were placed into administration, a big jump from 4,912 in 2021-2022.
A virtual creditors meeting will take place on November 7.
Ny Breaking Australia has contacted David and Leah Menner for comment.