Canberra-based builder Banyan Constructions has been placed into liquidation with debts of more than $22.3 million and 10 projects under construction, according to liquidators.
Banyan, which commenced in 2011, mainly specialised in the construction of townhouses and units, rebuilding homes, interior architecture and commercial works in the greater Canberra region.
The company went into liquidation in January and had debts to more than 260 creditors, some of which were owed in excess of $1 million.
Administrators Lachlan Abbott and Henry Kazar of Ernst and Young, said the collapse was due to losses on previous projects, a lack of capital and poor financial controls.
“Despite the Company recording a profit in FY18, the Company however incurred a loss of $2.3 million in FY17 and these losses have continued to accumulated to the date of our appointment.
“We expect the total value of the unsecured creditors’ claims will continue to increase as we receive additional formal proofs of debt or claims.
“The company does not have sufficient current assets to meet its current liabilities as and when they fell due.”
Banyan's aged payables were found to be 4.58 times greater than its aged receivables and the company was found to have committed a number of corporate breaches and running insolvent since June 2017.
It is understood that a number of the collapsed company's 250 creditors were mostly small local businesses.
The collapse also put an end to about 10 of Banyan's construction projects, including in the suburbs of Watson and Greenway, while 20 staff lost their jobs.
The concern moving forward is now around the effects of the coronavirus crisis on the industry, with construction traditionally accounting for more than one-fifth of all companies entering administration.
Last year, the number of companies in construction-related sectors going into external administration hit 1,700 over the calendar year, according to corporate regulator ASIC, following the two year housing downturn which slowed apartment and housing construction.
The main causes of failure were inadequate cash flow, poor business management, trading losses and poor financial controls.