Shock detail in company’s $1.4m collapse

A Melbourne building company that collapsed owing $1.4 million did not operate a bank account in its own name for almost five years, raising questions about where customers’ money was being deposited, according to a liquidator’s report.

In July, Blint Builders went into voluntary liquidation, with news.com.au revealing a number of homeowners were experiencing a “horrendous” amount of stress as they had poured hundreds of thousands of dollars into half-finished homes that had sat untouched for months.

Cliff Sanderson from insolvency firm Dissolve was appointed to handle Blint Builders’ liquidation in August this year.

He revealed that customers are owed close to $540,000 by the company but his investigations have been “frustrated” by Blint Builders’ sole director Michael James, who had “failed to respond to any of my correspondence or calls from my staff”, in a statutory report filed with the Australian Securities and Investment Commission (ASIC).

But in a bombshell section of the report, the liquidator claims customers’ deposits were paid into two accounts that were not in the company’s name.

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In fact, the ASIC report revealed that the company’s bank accounts with Bendigo and Adelaide Bank were closed on 13 September 2018. At that time Mr James was not a director of the business.

Instead, it found some customers had made payments into two bank accounts that were not in the company’s name.

“I have written to Bendigo Bank requesting to freeze the identified accounts and provide me with the bank statements,” the report from Mr Sanderson reads.

“I was advised that as the bank accounts are held in a different entity’s name, Bendigo Bank will not be able to comply with my request.”

He also identified a Macquarie Bank account in the company’s financial statements, but was advised by the bank that this no longer exists.

“The above suggests to me that for a considerable period of time, the company did not operate bank accounts in its own name and instead deposited funds to a related party bank account,” the report said.

‘Very unusual’

Mr Sanderson told news.com.au that it was “very unusual” for a company not to have a bank account in its name, although he noted this was not illegal.

“But logic says it should be the situation to have a bank account in the company’s name and the difficulty it creates is all the money has gone around the company’s controls, which means I don’t have a bank account to interrogate,” he said.

“I can’t look at receipts and payments as there are none in the company’s names and that creates problems in liquidation as I have to work out where the money went to and I have limited access.

“It makes the investigation much more difficult and makes the recovery actions much more difficult.”

Mr James, the current director of the collapsed company, is the only signatory to the bank accounts where deposits were made, the ASIC report noted.

In December 2018, some of the business’ assets and goodwill were sold to Mr James for $300,000 with a completion date for the sale in March 2020, although the exact nature of the transaction was “not clear”, the report added.

News.com.au has attempted to contact Mr James.

Ron Blint was a director of the company from 2008 to December 2021 and declined to respond to questions from news.com.au.

“In keeping with the law, my responsibility is to answer all questions put to me by the liquidator,” he said.

“I have done so till now and will continue to do so. I have been advised that it is not proper for me to engage with the press whilst the liquidation is ongoing, and will not do so.”

‘Low value’

The ASIC report also confirmed that the landlord had taken possession of Blint Builders’ offices after failure to pay rent.

However, abandoned items including furniture, computer equipment and other property, were of “low value” and not worth selling to recoup any of the debts.

Mr Sanderson said he had not been not provided books, records, a statement of account and a report on Blint Builders’ activities and property from Mr James, but had received some documentation from former accountants and the former director.

“I was informed by ASIC that this matter has been referred to the prosecutor for review and consideration with respect to commencing prosecution action,” the report stated in regards to Mr James’ failure to provide documentation.

‘Fearful we will lose the house’

One family impacted by the company’s collapse were Tony and Jo Firman and their two kids, who are building a home specially designed for her disability.

Mrs Firman has multiple sclerosis and the couple were building a home to meet her needs in the Melbourne suburb of Mordialloc, which included a swimming pool.

They had demolished the original home and signed up to build their $1.2 million house with Blint Builders, which was scheduled to be finished in mid February, and had paid $1.14 million so far to the company.

The 54-year-old said the couple had lodged an insurance claim which had outlined around 70 items that were outstanding from missing door handles to concrete benchtops.

He has also obtained quotes from existing trades on the outstanding work and estimates there is around $200,000 left of work to finish, from landscaping to painting to completing the pool.

But he said the family are “nearly broke”.

“The amount of rent we are paying every month is around $3000 and we are in financial distress. If Blint was still around, we estimate we would get around $50,000 worth of compensation both for penalties up until the point of terminating the contract and rent we have to pay until the house is finished. The insurer covers two months worth of rent,” he said.
“I’m most fearful we will lose the house at some stage in the future as we don’t know how much will be covered by the insurer, so it’s a fairly big price to get the house finished.

“It’s a very scary position to be in, especially in a declining real estate market and if the house isn’t finished it will be even worse as it could devalued.

“We are hopeful to get across the line and might have to borrow more money but our income really doesn’t support it at the moment.”

However, Mr Firman is trying to remain positive and hoping they get “lucky” and would be able to move in by the middle of next year.

‘Stop the hurting’

Another family who were impacted by the collapse were Dean and Nolle Fuller, who have five kids between them, and had already shelled out $480,000 to the construction company to build a $1.5 million townhouse.

Instead, the couple had been left with a slab and first floor framing, while their site had been vandalised twice since being left abandoned by the building company.

Mr Fuller said he had to spend $500 buying tarps to cover the framing in the hope it can still be used and spent two to three days covering the site himself.

He added the family had expected to be moving into their new home by Christmas this year, but instead have been forced to extend their rental for another 12 months.

The 54-year-old is currently going through the “long and slow process” of claiming insurance, which means at best construction won’t start again on their site until early 2023.

Meanwhile, the whole experience had left him with a “sour taste in his mouth”.

“It’s a pretty demoralising process and it takes a long time …,” he noted.

“I want to get the house finished and stop the hurting and get over the process. My wife has had enough and doesn’t want to talk about the house anymore – it’s a difficult process.”

The project manager added he was trying to remain strong but it took “mental toughness to push through and keep going” as he waits for the insurance to receive quotes from two builders and pay them out.

“The cost to build is going be well above what we were quoted two years ago and we are going to have to compromise significantly to get the same build for the same cost through no fault of our own,” he said.

Other creditor groups were owed between $29,000 and almost $488,000, the report also revealed, however it warned that not all potential parties had been identified and the debt could go even higher.

But Mr Sanderson said he would need $20,000 more to pay his fees to undertake further investigations and mount a recovery action.

However, without the funding it would be unlikely that creditors would see any of their money back, the report said.