Construction firm goes under owing $3m
A Brisbane civil construction company has gone under owing creditors $3.1m after COVID-19 delayed projects and it lost its JobKeeper eligibility.
Liquidators were appointed to Geebung-based GW Civil Contracting earlier this month after competitive pressure from larger companies squeezed margins and projects became less profitable.
Worrells liquidator Lee Crosthwaite told creditors that mounting losses meant shareholders were not prepared to further fund the company's operations.
"Larger companies have been putting pressure on margins and it was more challenging to win work," said Mr Crosthwaite.
"COVID-19 saw many projects being put on hold, resulting in a lack of work. The company won new jobs in February but they came too late."
Negotiations to sell the business ceased because of the COVID-19 shutdown and the company's employees lost JobKeeper subsidies last September.
Mr Crosthwaite said the company, which worked on roads, bridges and other infrastructure projects, owed creditors an estimated $3.1m.
That included $1.2m to a range of unsecured creditors including subbies and other contractors and more than $830,000 to the Australian Taxation Office. Employees are owed $390,000.
He said he would liaise with contractors about any rectification work required on the company's projects.
"The directors advise they are not presently aware of any significant issues at any of its job sites," said Mr Crosthwaite.
GW Civil director Lindsay Gordon was not available for comment.
CreditorWatch chief executive Patrick Coghlan said the number of external administrations had soared by more than 50 per cent in February and was likely to rise again in the coming months as JobKeeper ends and a three-month reprieve on credit arrangements for struggling businesses came to a close.
The Federal Government last year put in place a temporary moratorium on insolvent trading to give businesses time to recover from the pandemic.
"This could prompt a rash of insolvencies and subsequently, redundancies, which could be a destabilising force on the local economy," Mr Coghlan said.
Originally published as Brisbane construction firm goes under owing $3m