Another Australian housing company has gone bankrupt.
Mahercorp told its clients it will introduce voluntary administration but says it “has not collapsed.”
The construction company is based in Melbourne and is the parent company of Urbanedge and Eight Homes.
In a statement emailed to clients, President and CEO Steve Maher said, “I want to emphasize that Mahercorp has not collapsed and is not in liquidation,” he said.
“It is my intention to work with the property manager on a plan that will hopefully allow us to restructure the business, create a more sustainable foundation and complete your home.
Another Australian housing company has gone bankrupt. Mahercorp told clients it will introduce voluntary administration but says it ‘has not collapsed’
“It’s no secret that all builders are facing unprecedented challenges right now. Construction costs are skyrocketing — material and labor costs are at record highs and rising inflation is putting enormous pressure on builders.
“To alleviate the pressure of these cost increases, we have been renegotiating our trading terms with our suppliers and insurers for several months now. Their support so far has helped us manage rising costs.”
He explained that entering voluntary administration was their “only option” after learning their insurer would no longer support their business.
“I understand this is disappointing news for you and I want to explain to you why this is happening and tell you for yourself what it means for your home,” he said.
“Preparation for your new home to move into the venue will be suspended for the five-week duration of the voluntary administration. All appointments, including contract, electrics or colors, that you have booked during this period will also be put on hold.
The construction company is based in Melbourne and is the parent company of Urbanedge and Eight Homes (stock image)
“Let me reassure you that I intend to work closely with the administrators on a plan to get things back on track.”
Most of their work is in Melbourne’s northern and western suburbs.
Cor Cordis has been appointed as administrators.
In a statement, they said construction work will be paused while they review the company’s operations.
“We have initiated an urgent review of Mahercorp’s financial position and have held preliminary discussions with senior management regarding a proposal to restructure the company,” they said.
Mahercorp told clients it will introduce voluntary administration but says it ‘has not collapsed’
‘We have set up a direct telephone line and e-mail address for customers, employees and creditors.
“We will update all stakeholders regularly as we go through the voluntary administration process.”
It is the latest in a string of construction companies that have collapsed over the past year as they continue to reel under the effects of the Covid pandemic and the lack of wood and other materials due to the conflict between Russia and Ukraine.
Across Australia, bankrupt companies owe hundreds of millions of dollars to subcontractors, traders, customers and the tax authorities.
Some of the biggest names in the Australian construction industry have gone bankrupt in the past year, including Probuild, Home Innovation Builders, Privium, Condev Construction and Pivotal Homes.
The rot started during the Covid-19 pandemic, with many companies unable to find staff and experiencing difficulties finding and paying for materials due to a global shortage.
Congested supply chains were exacerbated by the war in Ukraine and embargoes on Russian supplies such as timber, along with rising fuel prices and high wages.
This has caused material costs to increase by more than 20 percent since early 2022, with some items rising much more.
Pine wood more than doubled in price, while reinforcing steel, glass, plasterboard, fiber cement and other materials also became much more expensive.
Such price increases meant that many permanent contract construction projects were no longer viable.
For example, if an agreement is made for a $10 million permanent contract and the price of materials suddenly skyrockets again, the potential profit decreases or may become a loss.
Perth-based BGC Group posted a loss of $41.6 million last year, despite a 20 percent increase in revenue to $1 billion.
It was for sale last April, but was taken off the market five months later due to ‘market conditions’.