Homeowners from a construction company that collapsed last month and owed $23 million have been dealt another devastating blow.
In a creditors’ report published last week and obtained by news.com.au, the appointed liquidators revealed that they seek clients for money.
That’s despite most homeowners having to fork out hundreds of thousands more to build their homes, as costs have skyrocketed and state insurance only covers 20 percent of the contract price after the demise of the house. business.
In early July, Victorian residential builder Brurob Nominees Pty Ltd, also known as Langford Jones Homes, and its sister company Woodside Building Services Pty Ltd, went into liquidation.
The construction company’s bankruptcy affected 66 homes and more than 400 creditors. While initial estimates put the debt at $10 million, the latest report shows the amount owed has ballooned to $23 million.
That same report found that 23 homeowners, one-third of those affected, actually owe Langford Jones Homes money because they never paid the last installment on their homes.
Eight owners have already been contacted and letters will soon be sent to the others demanding payment.
Donna Taylor, a postman on Phillip Island, south of Melbourne, is hoping to get one of those letters even though she’s left $180,000 out of pocket for the whole ordeal.
“They’ll probably bill me for a retaining wall, I’ll tell them to fuck off,” he told news.com.au.
Ms. Taylor, 53, signed with Langford Jones in 2020 and is down to a frame after a year and a half into her $365,000 build.
He shelled out $155,000 in progress payments before Langford Jones Homes went bankrupt.
Now the would-be homeowner is concerned that her frame may need to be demolished entirely as it has been uncovered for four months during heavy rains and some of the wood has turned black.
Unfortunately, Victoria’s national building insurance only pays up to 20 percent of the building contract price.
“The builder’s insurance will only cover me for $70,000,” Ms. Taylor said.
“I already have a builder’s quote (and I’m going to) pay $180,000 out of pocket.
“I had $210,000 left to complete the house. It now costs something like $460,000 to complete.”
When it comes to the 23 homeowners being personally persecuted by the liquidators, Ms Taylor said she had a “feeling I might be one of them”.
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Builders put up a retaining wall on Ms. Taylor’s home several months ago, which cost nearly $6,000.
“I was never charged for it,” he said.
“It’s too scary, I start to cry when I think about the money.”
The additional $180,000 you will now have to shell out to complete your home will effectively eat up the profit you made selling your old home.
“That’s almost all of my last mortgage on the last house,” he explained.
“I was going to be mortgage-free and semi-retired, now I’m probably going to have to do a full-time job plus a side job, I’m going to have to take out a $100,000 mortgage (to pay for that).”
Richard Stone and Jonathon Colbran of RSM Australia Partners were appointed joint liquidators of Langford Jones Homes in July.
In the report sent to the creditors, they stated that they had “issued demand letters to several clients and started collecting the amounts owed to the companies.”
“Brurob’s (Langford Jones Homes) books and records indicate that these homeowners owe money to Brurob in respect of unbilled work in progress and outstanding progress claims.
“To date, payment demands have been issued to eight owners. Progressively, more demands will be issued to 15 homeowners for unbilled works in progress.
Stone admitted that the cards have so far received “mixed reviews” from customers.
“It’s been a mixed bag, some (of those customers) have paid, some have offered a compromise figure, some have indicated they’re not happy,” he told news.com.au.
The trustee revealed that they had sold the company’s “limited physical assets”, which were mostly vehicles, although many were subject to financing.
“There are no other known physical assets available to realize,” Stone said.
As a result, the company has only $30,000 of the net sales proceeds.
That’s $30,000 to share among more than 400 creditors who amass $23 million.
The bankruptcy firm has also estimated that it should receive compensation of $200,000 to $300,000 from Langford Jones Homes and $30,000 to $50,000 from Woodside Building Services.
The liquidators have not ruled out personally going after the director of Langford Jones Homes, the eponymous Bruce Langford-Jones, and his son Sam.
“A search of the National Index of Personal Insolvency confirms that the directors are not bankrupt,” they said.
Stone said he was looking into Langford-Jones and considering whether to pursue the matter.
“That will be subject to further investigation, to identify if there is any claim against the director, for breach of duties or insolvent transactions,” he said.
In order to gain access to the director’s personal assets, he would have to go to trial, he added.
Bruce Langford-Jones said in a written statement to ABC last week that he had been removed due to the collapse of his company.
“Our family has lost everything, my son has lost his house. My wife and I have lost our family home and our vacation home,” Langford-Jones said.
“Builders across Australia are just hanging on.”
He blamed the company’s failings on two cyberattacks in December 2019 and January 2020, which he claimed depleted the construction company of $2 million.
Ms Taylor has called on government regulators to do more instead of trusting company directors to do the right thing in what she called an “honesty system”.
“There is no protection for the consumer,” he said. “How many of us have lost our homes and our futures and our dreams and our money? Builders have to be more responsible.”
Last month, news.com.au spoke to other affected homeowners, former staff members and contractors who had been left in the lurch and, in some cases, financially ruined by the collapse of Langford Jones Homes.
Brody* runs a small business with three other employees and claims Langford Jones Homes owes him $150,000 after spending his own money to purchase materials.
The contractor, based on Victoria’s Mornington Peninsula, said that was the sum total of his life savings.
“I don’t really have any money, I have to borrow money from my father,” the 49-year-old told news.com.au.
“Six months ago, just before Christmas, they claim they were hacked [which was why] They didn’t pay anyone.”
However, the tradie claims that the company was in trouble long before they were hacked or when the Covid-19 pandemic hit, as Langford Jones Homes always had trouble paying him.
“I started working for them in 2019, for the first six months they didn’t pay me,” he added.
James* was one of several Langford Jones Homes site supervisors who resigned en masse once they understood the scope of the financial problems facing the company.
“It was the worst moment of my life,” he said.
Another employee, Vincent, said: “I could see the writing on the wall. I couldn’t face clients, you know people pay deposits and don’t build their house.”
David Drummond and his wife, of nearly 60, said they are “devastated” and that the company’s liquidation “will be a huge financial loss for us.”
“We will sell and move on and not proceed with construction with anyone else. This has also destroyed our plans for a seaside retirement,” he told news.com.au.
*Names withheld for privacy reasons