The construction regulator has authorized Cullen Group to continue operations after paying off its debt

Update

November 28, 2018 15:32:13

Regulators have left the company at the heart of one of the largest collapses in the Queensland building industry to continue operations for nine months after the non-payment of a $ 75,000 debt.

The Queensland Building and Construction Commission (QBCC) was informed of a default judgment rendered by a court of appeal against the Cullen Group in March 2016, but decided not to amend the license. of the society.

The Cullen group collapsed in late December of the same year and owed over $ 42 million to more than 600 creditors.

"I do not think there's enough checks and balances in place," said Rick Low, a subcontractor who successfully sued the Cullen group.

"I do not think that they [QBCC] were ready for how much work was going on in the pipeline ".

The QBCC ordered an independent audit of the Cullen Group in early 2016 and decided that its financial statements were sufficiently secure to allow it to retain its license to manage projects of up to $ 60 million per year.

Asked whether the regulator had been misled by the audit, QBCC commissioner Brett Bbadett said at 7.30: "We still want to make sure that the people who provide information to the QBCC, who could be provided by accountants, are correct, "he said.

"That makes a lot of creditors"

Michael Caspaney, the liquidator of the Cullen Group, found that the company was in full liquidation business for almost all of 2016.

"They used a whole group of subcontractors and when they could not pay for them, they simply went to another batch and then to another," he said at 7.30.

"In the end, there were 658 creditors, and that's a lot of creditors."

He said the default judgment rendered in March 2016 against the Cullen group was a sign that the company may have been insolvent.

"It's a very obvious indicator that the company can not pay its bills," he said.

But the QBCC Commissioner stated that this was not important enough to change the Cullen Group's conditions of license.

"A debt does not necessarily mean that a company is trading in being insolvent," Bbadett said.

The QBCC did in fact issue a notice of proposed license suspension against the Cullen Group that it did not pay the $ 75,000 to Mr. Low's All Pro Corporation before July 18, 2016.

"And it's only as a result of our interaction that the day before the suspension was to come into effect, the money was paid off," Bbadett said.

The liquidator found that in early 2016, the Cullen Group was committed to paying $ 43 million worth of new projects with a bank overdraft facility of $ 2 million only.

"In my opinion, the company could not maintain this level of work," Caspaney said in his 2017 solvency report.

The building industry & # 39; sees a proliferation of phoenix activity & # 39;

The financial situation of the Cullen Group and another bankrupt company, Queensland One, will be the subject of a public hearing before the Federal Court in Brisbane next year.

The hearings will probably also focus on the findings of the liquidator in both companies regarding a possible illegal activity of phoenix, namely the creation of new companies to avoid paying creditors.

Just prior to the Cullen Group's collapse, the company's chief operating officer, Geoff Belford, was appointed director of Onpoint Construction Pty Ltd.

The following month, the QBCC issued a public warning prohibiting dealing with this company.

"The CCCQ is warning all people who deal with Onpoint Construction Pty Ltd to be extremely cautious and seek legal advice before making any payments in order to protect their interests," the CCCQ said on June 6. January 2017.

The Australian Restructuring, Insolvency and Turnaround Association claims that the illegal trade in phoenixes is a particular problem in the construction sector.

"There is no doubt that the phoenix industry is proliferating in the building industry," said John Winter, of the badociation.

"In fact, it's the only area where there are almost no constraints."

Subcontractor Hayden Quaife, who worked for Cullen in the multi-million dollar Boheme apartment complex, on the Gold Coast, said the liquidation of a construction company had cost millions of dollars to his roofing business.

"The situation is getting worse, in the last four or five years it has been exponential, absolutely disgusting," he said.

Topics:

building and construction,

business-economics-and-finance

regulations

law-crime-and-justice

qld,

Brisbane-4000

Australia,

Southport-4215

First posted

November 28, 2018 15:26:08