A construction company operating under almost half a dozen different names has entered into liquidation after racking up millions of dollars in unpaid debts.
Simsai Construction Group in Perth has been forced to give up nearly 100 projects after being hauled to Federal Court by the Australian Tax Office on Tuesday.
The embattled home builder entered into liquidation owing $4.5 million after an email exchange between the Deputy Commissioner of Taxation’s lawyer Jane Carmel and lawyers for the administrators of Simsai.
Directors at Simsai, which also operated under First Home Buyers Direct, Multi Develop 360, and Express Homes, blamed ballooning costs, the erosion of margins and difficulties in retaining staff as reasons they had to close the business.
Ninety-seven customers who had employed Simsai with the construction of their homes have since been told to engage new builders since the company’s collapse.
Simsai Construction Group has entered into liquidation after a legal battle in the Federal Court revealed that the company owed $4.5 million and had no way to pay it
Simsai was forced to give up nearly 100 projects and tell 97 customers to engage with other builders
Simsai first started experiencing troubles in 2018 and had filed a report to creditors which showed that it was struggling to meet tax obligations and pay employees.
The company entered insolvency in July 2021 and in October of the following year insurer QBE raised concerns over its finances and working capital deficiencies.
QBE reported that Simsai’s directors may have breached their duties by trading insolvent and withdrawing funds when the company could not pay its debts.
Officers from the ATO were handed control of the company five weeks ago following a wind-up order in September from Registrar Russell Trott.
Creditors from the Osborne Park-based construction group had initially planned to meet with administrators from Cor Cordis, Jeremy Nipps and Thomas Birch but this meeting will now be postponed in light of recent events.
Simsai was first registered in 2009 and is the latest construction company to crumble after pandemic-era tax cuts end and the market returns to normal.
Federal government hand-outs in June 2020 drove a spike in demand for construction but since then inflation has battered the industry.
The ATO has been aggressively following up on unpaid debts recently with the deputy commissioner of taxation has instigating more than 50 actions this year, 22 of which resulted in a business entering liquidation.
Simsai was registered in 2009 but faced financing issues in 2018 when a report submitted to creditors showed that it was struggling to pay employees wages
Initially the group had dreamed of becoming one of the largest construction firms in WA by 2025 but were derailed by ballooning costs and the loss of crucial employees