Almost 250 creditors owed more than $22 million by a collapsed Canberra builder will likely get nothing back, liquidators Ernst & Young say.
Banyan Constructions was placed into liquidation in January, prompting fears it would spark a wave of collapses through the local industry.
A report prepared by Ernst & Young and released today estimates that Banyan has 241 unsecured creditors, none of whom will be paid back the money they are owed.
The creditors, mostly small local businesses, are owed more than $22 million in total. Some individual creditors are owed more than $1 million.
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.
Liquidators outline reasons for failure
Ernst & Young found the main reasons for Banyan's failure were losses on previous projects, a lack of capital and poor financial controls.
It said its investigations identified several potential corporate breaches, such as insolvent trading and voidable transactions.
The liquidator also considered whether a company officer "may have been guilty of an offence".
Referring to Banyan managing director Liam Kelly, Ernst & Young said its "investigations into the books and records of the company indicates that the director breached his duty" under the Corporations Act.
"This is based on evidence that the director did not adequately monitor the company's affairs and ensure that the company was able to meets its payment obligations when they fell due, resulting in the unpaid creditors of the company exceeding $26 million …
"We are of the opinion that the director may have also failed to act in good faith and for a proper purpose."
Banyan's Fyshwick office has been abandoned and calls revert to a voice message. The mobile phone number of its managing director, Liam Kelly, has been disconnected.
'Couldn't have come at a worse time'
The Master Builders Association, which is owed $800 by Banyan, said the collapse was a "double whammy" to many local and family businesses in Canberra, which were already struggling during the coronavirus pandemic.
"It couldn't have come at a worse time," the association's chief executive, Michael Hopkins, said.
"Many local subbies and suppliers are going to be even more vulnerable as they move into the likely downturn that's going to result from the coronavirus."
He said some of the affected businesses might not survive without help.
"Targeted government support might be needed for those businesses to get them through — to basically let them survive the next six months."
The Construction Union (CFMEU) echoed the view, warning that the flow-on effects would destabilise the industry in the ACT.
The CFMEU's ACT secretary, Jason O'Mara, said losing $1 million would crush many businesses.
"For small business in a community like Canberra it's extremely hard to come back from having a loss of that magnitude on your books," he said.
He said the collapse would harm both employers and workers, saying the amount owed was "a huge amount of money".
"Contractors and suppliers are greatly affected by this, but there was also around $750,000 of unpaid wages and entitlements to workers."
Ernst & Young said it would report its findings to the corporate watchdog, the Australian Securities and Investment Commission, and consider litigation.
