Building companies under financial stress

An administrator handling the closure of one of Canberra's largest joinery firms warns more building companies are struggling.

A total of 33 workers and nine subcontractors at Douglas Quality Joinery have been told the company is closing after 30 years of operation.

The Hume-based building company has been working on projects including large apartment blocks at Kingston and in Lyons.

RSM Bird Cameron administrator Frank Lo Pilato says the overheads were too high for the company to continue operating.

"We ceased trading because we don't have the funds to continue trading to keep employing people," Mr Lo Pilato said.

"So an advertisement will go in to try to sell the business in situ." He says margins are tight across the ACT building industry.

"The construction industry is struggling, I think there's a lot of cash flow issues," Mr Lo Pilato said.

"Sometimes with these companies they get into particular projects but they don't go well, cash flow dries up, a lot of resources are exhausted on that particular project rather than other jobs.

"I think people go in with low margins as well, so if there's a mistake or a delay, you're going to pay the price for it.

"I'm seeing a lot of stress out there." The warehouse and all of the assets of Douglas Quality Joinery will be sold off.

Mr Lo Pilato says the permanent employees will receive their entitlements.

"The employees are covered by the Government's assistance program," he said.

"So the employees will get covered for their annual leave, unpaid wages and notice in lieu of redundancy, but they won't get covered for superannuation.

"But in terms of sub-contractors and any other suppliers which aren't secured, at this stage I believe there probably won't be any dividend for any unsecured creditors.

"The majority of assets will go to pay the secured creditor which is the Westpac Bank."

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