Perth construction company collapses leaving behind millions of dollars worth of debt
A construction company operating under nearly half a dozen different names has filed for liquidation after racking up millions of dollars in unpaid debts.
Perth construction group Simsai was forced to abandon almost 100 projects after it was taken to the Federal Court by the Australian Taxation Office on Tuesday.
The embattled property developer has entered liquidation over $4.5 million in debt following an exchange of emails between the deputy tax commissioner’s lawyer Jane Carmel and lawyers for Simsai’s administrators.
Directors of Simsai, which also operated under First Home Buyers Direct, Multi Develop 360 and Express Homes, blamed inflated costs, declining profitability and difficulties in retaining staff as reasons why they had to close the business.
Ninety-seven clients who hired Simsai to build their homes were told to bring in new builders after the company collapsed.
Simsai Construction Group has entered liquidation after a Federal Court battle revealed the company owed $4.5 million and had no way to pay it.
Simsai was forced to abandon almost 100 projects and offer 97 clients to work with other builders.
Simsai first began experiencing problems in 2018 and filed a report with creditors that showed the company was struggling to meet tax obligations and pay employees.
The company filed for bankruptcy in July 2021, and the following October insurer QBE raised concerns about its finances and lack of working capital.
QBE said Simsai’s directors may have breached their duties by trading insolvent and withdrawing funds when the company was unable to pay its debts.
ATO officers were handed control of the company five weeks ago following a winding up order issued in September by registrar Russell Trott.
Lenders from the Osborne Park-based construction group had originally planned to meet with administrators Cor Cordis, Jeremy Nipps and Thomas Birch, but that meeting will now be postponed in light of recent events.
Simsai was first listed in 2009 and is the latest construction company to go bust after tax cuts ended during the pandemic and the market returned to normal.
A federal government bailout in June 2020 led to a surge in construction demand, but inflation has since hit the industry.
The ATO has been active in monitoring unpaid debts recently, with the Deputy Commissioner of Taxes bringing more than 50 claims this year, 22 of which resulted in business liquidation.
Simsai was incorporated in 2009 but ran into funding problems in 2018 when a report submitted to creditors showed the company was having difficulty paying staff salaries.
The group initially dreamed of becoming one of Western Australia’s largest construction firms by 2025, but its plans were derailed by soaring costs and the loss of key staff.