Victorian builder Mahercorp, a company that confesses to have juggled the pressures of rising construction costs for several months, is adamant that it has not collapsed after calling in voluntary administrators last week and leaving the fate of more than 700 homes up in the air.
Mahercorp, the parent company of Eight Homes and Urbanedge Homes, sits just outside of Australia’s top 20 home builders and its financial woes are the latest reminder of the pressures faced by the construction industry nationally.
While the debts owed to creditors have yet to be disclosed, administrators Jeremy Nipps, Barry Wight, and Rachel Burdett, of restructuring advisory firm Cor Cordis, are currently examining the company’s affairs to determine whether a restructuring is possible.
In a letter to customers, Mahercorp CEO Steve Maher told customers last Friday that he had made the ‘difficult decision’ to call in voluntary administrators.
“From the outset, I want to stress that Mahercorp has not collapsed and is not in liquidation,” Maher says in the letter.
The comments come in the wake of the collapse in March of Porter Davis, which involved 14 group companies building 1,500 homes in Victoria and 200 in Queensland. Porter Davis was Australia's 12th-largest homebuilder in 2022.
The final straw for Mahercorp came last week when it lost the support of an insurer for the supplier of essential safety equipment.
“It’s no secret that all builders are facing unprecedented challenges right now,” Maher says in the letter.
“Building costs are skyrocketing – materials and labour costs are at record levels and rising inflation is putting huge pressure on builders."
Maher says his company has been renegotiating trading terms with suppliers and insurers ‘for some months’ to manage ‘spiralling costs’.
“Entering voluntary administration was the only option,” he says.
Maher stresses that the voluntary administration only affects two companies in the group, Mahercorp Pty Ltd and House & Land World Pty Ltd.
A statement by the voluntary administrators revealed that Mahercorp acted early after determining that ‘it was or would shortly become insolvent due to a significant supply chain issue’.
“We’ve commenced an urgent review of Mahercorp’s financial position and have held preliminary discussions with senior management regarding a proposal to restructure the business,” say the administrators in a joint statement.
“We’ve set up a direct phone line and email address for customers, employees, and creditors. We will be providing regular updates to all stakeholders as we work through the voluntary administration process.”
Business News Australia has sought further comment from the voluntary administrators at Cor Cordis.
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