Administrators of collapsed home builder Inspired Property Group have knocked back a low-ball rescue bid and warned that the company was likely insolvent by June 2024.
McGrathNicol’s Rob Kirman and Rob Brauer were put in charge of the troubled construction company in early April and have tallied claims of up to $35 million from creditors.
That includes a whopping $12m to $19m of potential claims from disgruntled homeowners for defects, escalating building costs, and out of pocket expenses including rent incurred when the company failed to meet contractual obligations.
More than 80 homes were unfinished when Inspired went under and the average contract age was almost four years, according to an administrators’ report obtained by The West Australian.
It comes more than 18 months after Inspired customers spoke out about the frustrating delays on their builds, and amid widespread troubles in the construction industry thanks to the stimulus-fuelled building bubble.
The report shows a deal to revive the company was lobbed by a business linked to the family of Inspired boss Vas Spaseski.
The business — Incito Investments — pledged to chip in $350,000 to partly fund a deed of company arrangement which would buy the builder out of administration.
That would return unsecured creditors about 0.3 cents per dollar owed.
McGrathNicol knocked back the offer given the “low level of return” and instead recommended Inspired head to liquidation.
Their investigations indicate Inspired was insolvent by June 2024, or earlier, with a potential insolvent trading claim of $3m. Liquidators would need to probe this further and the director would be able to defend any claim.
Inspired had a shortage of liquid assets from the 2022 financial year, and ran losses from 2023.
The report shows Mr Spaseski chalked up the company’s failure to factors including trading losses from fixed price contracts; high costs for subbies, suppliers and materials; and an inability to secure workers.
Administrators said legal actions, unpaid tax bills, and build delays draining cash also contributed to the demise.
The company had depended on related party funding — other businesses within the group — to keep afloat, but the money dried up in mid-2024, according to the report.
Inspired’s revenue surged to $32m in the 2022 financial year at the height of the building bubble. The company posted losses from the following year onwards.
“The business experienced rapid growth following successive federal and state government stimulus programs introduced in FY21 and FY22 to support housing construction during and after the COVID-19 pandemic,” administrators said.
At the time of the administration, Inspired’s books showed assets of $8.9m and debts of $10.5m — and a complex web of transactions with closely-linked companies which would be able to claim $2.2m
But the report highlights one particular deal for further scrutiny — about $1.5m owed to the business by related company V&D Family Trust.
Inspired was building four residential homes for the director, his wife, and a related business. Administrators so far reckon those projects were on par with Inspired’s other customers.
The report — now filed with the corporate regulator — also confirmed an investigation into Inspired by regulators the Department of Energy, Mines, Industry Regulation and Safety.
DEMIRS is taking a look at allegations of negligence, failing to ensure work was carried out properly, misleading conduct and invoices issues before work was finished.
Administrators believe the company may have accrued significant liabilities while insolvent and entered into deals benefiting related parties while insolvent.
