Victorian builder enters administration – but insists it will survive

Another Australian home builder has entered administration, but insists that it will survive.

Victorian construction company Mahercorp entered voluntary administration Friday, putting its construction projects on hold for more than a month, The Australian reported.

Cor Cordis has been called in as administrator, according to The Australian.

The voluntary administration comes just weeks after construction giant Porter Davis Homes collapsed, leaving more than 1,700 projects unfinished.

Mahercorp is the latest victim of a perfect storm of rising costs, shrinking profit margins and labour shortages that has pushed builder after builder into collapse. The collapses have left creditors unpaid and projects unfinished across Australia.

Mahercorp is the parent entity of Melbourne builders Urbanedge Homes and Eight Homes, which specialise in construction in the city’s northern and western suburbs, The Australian reported.

In a letter to customers, Mahercorp chief executive Steve Maher, who founded the company in 2002, said Mahercorp had not collapsed and was not in liquidation.

“My intention is to work with the administrator on a plan that I hope allows us to restructure the business, creating a more sustainable footing and to complete your home,” Maher wrote.

‘Unprecedented challenges’

Maher blamed external factors for the company’s troubles.

“It’s no secret that all builders are facing unprecedented challenges right now,” he wrote. Building costs are skyrocketing – materials and labour costs are at record levels and rising inflation is putting huge pressure on builders.”

Read next: Collapsed builder owes $40m

Maher said that the company had been renegotiating terms with suppliers and insurers for several months, The Australian reported. The administration became unavoidable, he said, when Mahercorp lost a key insurer.

“Entering voluntary administration was the only option after being advised earlier this week that the insurer for our supplier of essential safety equipment would no longer support our business,” he wrote.

Projects on hold

Maher said the company’s building projects would be put on hold for five weeks during the voluntary administration, but vowed to try to save the business, The Australian reported.

“Let me assure you again that I intend to work closely with the administrators on a plan to get the business back on track,” he wrote.

The Housing Industry Association recently warned that 2023 could be the construction sector’s worst year in a decade as repeated interest rate hikes and rising costs stifle demand.

Have something to say about this story? Let us know in the comments below.