A luxury home building company has gone into administration owing more than $2million, with bad management, rising building costs and a marriage break-up blamed.
Residence Building Group, an Adelaide-based house builder, was placed into voluntary administration on October 3 after trading for 14 years.
The construction company had specialised in building architecturally-designed houses, renovations and extensions in Adelaide’s more upmarket eastern suburbs.
Administrator Agile Business Advisory released a report to creditors on Monday night detailing how the building company, with an office in North Adelaide, owed almost $2.1million.
Making matters more complicated, the company’s key directors were married but are now separated, with the founder’s wife owing money for construction work on their family home, the administrator’s report said.
A luxury home building company has gone into administration owing more than $2million, with bad management and rising building costs blamed
Residence Building Group, an Adelaide-based house builder, was placed into administration on October 3 after trading for 14 years
The company’s outstanding debts included $557,717 to 58 trade creditors who had yet to be paid for goods and labour, $726,330 to the tax office, $629,775 in unsecured loans and $180,803 to property owners for incomplete work.
‘The following summarises the unsecured creditor position, although as noted further below, the value of unsecured debts will likely increase significantly,’ the administrator’s report said.
Agile Business Advisory director Leigh Prior said Residence Building Group had suffered from ‘poor strategic management’ during a time of rising building costs.
‘Based on my investigations to date, I am of the opinion the major reasons for the failure of the company’s business include difficult trading conditions facing the building industry generally, including rising input costs, supply chain delays and shortage of trades,’ he said in the report obtained by .
Mr Prior also cited ‘unprofitable fixed price contracts’ which had led to ‘increasing liabilities and the inability to pay debts as and when they fell due’.
His report also noted the company blamed the previous Coalition government’s HomeBuilder program that gave $15,000 grants in 2020 during the start of the Covid pandemic.
‘Factors which the director considers contributed to the failure of the company’s business include the effects of Covid-19, pressure the Commonwealth Government’s Homebuilder program placed on the industry, inflation, and difficulties arising from a fixed price contract environment,’ it said.
Director David Menner established the business in July 2009 and with his estranged wife Leah Menner owned a 50 per cent share in Residence Building Group.
The couple, who have three children, also ran ‘Little City Studio’ with two co-working hubs in Prospect and Unley.
But now Leah Menner – described in the administrator’s report as ‘the director’s estranged wife’ owes $240,000 for construction work undertaken on the residence she owned with her estranged husband.
‘I have been advised that Ms Menner subsequently resigned as a 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 established the business in July 2009 and with his wife Leah owned a 50 per cent share in Residence Building Group
The construction company had specialised in building architecturally-designed houses, renovations and extensions in Adelaide ‘s more upmarket eastern suburbs
Administrator Agile Business Advisory released a report to creditors on Monday night detailing how the building company, with an office in North Adelaide, owed almost $2.1million
The home building group had made a loss for two straight financial years, losing $554,714 in 2021-22 and $313,901 in 2022-23.
Losses in the 2023-24 financial year so far have added up to $94,693.
The Reserve Bank of ‘s 12 interest rate rises since May 2022 – taking the cash rate to an 11-year high of 4.1 per cent – have coincided with a rise in companies being placed into administration.
‘s major banks – Commonwealth, ANZ, Westpac and NAB – are expecting a Melbourne Cup Day rate rise next week that would take the cash rate to a 12-year high of 4.35 per cent.
Agile Business Advisory director Leigh Prior said Residence Building Group had suffered from ‘poor strategic management’ during a time of rising building costs
n Securities and Investments Commission data showed 721 companies were placed into administration in September 2023, compared with 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 2021-22.
A virtual meeting of creditors is being held on November 7.
has contacted David and Leah Menner for comment.