Massive blow for subbies in chaos left by Ri-Con collapse
SUBCONTRACTORS will likely be the big losers from the collapse of council-favoured Ri-Con Contractors with the latest report revealing they are unlikely to see a cent of the almost $5 million owed.
The report lodged with ASIC by liquidator Worrells revealed the company, which won multimillion-dollar contracts with the Gympie, Sunshine Coast and Noosa councils, was likely trading insolvent from the middle of last year.
It went into liquidation in January.
At the time $1.1 million in bills was more than three months overdue, and a further $654,000 was a month late.
But the company's financial situation, and the declaration of director John Raymond Jenkins as bankrupt, meant almost every debtor would be left in the cold.
"Without funds to pursue certain claims, it is likely that the only dividend will be paid to the Commonwealth Bank regarding its security over the company," liquidator Paul Nogueira said.
One of Ri-Con's Commonwealth Bank balances was overdrawn by $565,000.
A further $89,000 was overdrawn on a credit card.
The remaining bank accounts had nothing in them.
Ri-Con won major contracts in the region including the Kilkivan Equestrian Centre, the Gympie Youth Precinct and the Caloundra Tennis Centre.
Questions continue to swirl over claims at least two of these councils were told subbies had been paid.
But answers are in short supply.
"Creditors have indicated that they believe the director falsely signed statutory declarations on projects which is a potential breach under various legislations," he said in the report.
However, the shortage of funds and limited access to Ri-Con's accounting systems left him "unable to form any view" on the claims.
"This matter will be left for ASIC to review and fund any further investigation."
The Sunshine Coast and Noosa councils each owed money to Ri-Con when it went under. The report said Noosa council owed more than $320,000.
The council disputed this due to "rectification costs necessary to address incomplete works on the project".
"Consequently (the Noosa Shire Council) is withholding the money to satisfy such costs incurred by obtaining a new contractor to complete the project."
Sunshine Coast Regional Council's debt was reportedly $160,000.
This figure was also under dispute as "variations were made on the company's progress claims that were not approved by the council and therefore rejected".
Three projects were also left incomplete when Ri-Con collapsed.
A Gympie Regional Council spokeswoman confirmed in January Ri-Con had been paid for all of its completed work in the region.
Sources say the final payment for the Kilkivan Equestrian Centre was delivered to the company in mid-September - likely after the company had begun trading insolvent.
More than $175,000 in surety bonds were held on Gympie Regional Council projects when Ri-Con fell over.
Almost $300,000 in bank guarantees were held on Sunshine Coast Council jobs, and more than $50,000 for Noosa Council work.
"It is my understanding that many of the principals are calling on the surety bonds and bank guarantees for incomplete work and rectification costs," Mr Nogueira said.
Ri-Con was also owed a significant chunk of money from other companies when it collapsed.
Almost $500,000 in loans were owed by four companies, including $472,000 from the Commando Pty Ltd ATF Jenkins Family Trust.
Unfortunately, these companies "have little to no assets to satisfy the outstanding loans".
Mr Jenkins himself apparently owed the company $97,000 in an outstanding loan. But investigations into the business by Mr Nogueira were limited due to the "company's software provider restricting access to the company's accounting file".
A shortage of funds made it difficult for that access to be reinstated, he said.