EQ Construction enters administration as latest construction company collapses

• Another construction company has collapsed
• EQ Constructions entered administration

Luxury home builder EQ Constructions has filed for bankruptcy with debts ranging from $40 million to $50 million.

The NSW-based company, also known as EQ Projects, collapsed earlier this month, owing money to between 400 and 500 creditors.

It is the latest in a string of construction companies to collapse over the past year as they continue to be impacted by the effects of the Covid pandemic and invasion of Ukraine.

Westburn Advisory handles administration, and its director, Shumit Banerjee, said some projects are still incomplete.

“There are ongoing projects and these are at different stages – some are in the warranty period and some are in the middle so it’s a mixed bag,” he told news.com.au.

“There’s a fairly large project in Bowral, there’s a large block of flats in Parramatta and the rest are scattered across NSW.

“The director intends to restructure the company and offer a deed of corporate agreement and no employees have been laid off – there are about 40 employees.”

The collapse was caused by multiple factors including the Covid pandemic and bad weather after Sydney 2022 had its wettest year on record.

Mr Banerjee said work is being done to ensure staff keep their jobs.

EQ Constructions had won a $600 million residential development bid to build hundreds of apartments in Zetland, Sydney.

It is the second construction company to file for bankruptcy this month after Victoria-based Delco Building Group appointed insolvency practitioners on February 2.

The announcement came as a shock as the company was well regarded and had won a Master Builders Victoria Excellence in Housing Award.

The week before, it was announced that two Western Australian companies, WA Housing Group and Individual Developments WA, had collapsed.

And Hallbury Homes filed for bankruptcy on Jan. 4, owing creditors around $7 million.

Across Australia, failed businesses owe hundreds of millions of dollars to subcontractors, dealers, customers and the Inland Revenue.

The construction industry is not in big trouble because of a lack of customers – the problems go much deeper.

Some of the biggest names in Australian construction have defaulted over the past year including Probuild, Home Innovation Builders, Privium, Condev Construction and Pivotal Homes.

The rot began during the Covid-19 pandemic when many companies were unable to find staff and faced problems sourcing and paying for materials due to a global shortage.

The war in Ukraine, rising fuel prices and high wages aggravated supply chains.

This has resulted in material costs increasing by more than 20 percent since the beginning of 2022, with some items even more significantly.

Pine has more than doubled in price, but rebar, glass, plasterboard, fiber cement, and other materials are also rising sharply.

Such price increases meant that many permanent contract construction projects were no longer profitable.

For example, if a $10 million firm contract is signed and material prices suddenly skyrocket again, the potential gain dwindles or becomes a loss.

Perth-based BGC Group posted a loss of $41.6 million last year, even as its revenue grew 20 percent to $1 billion.

It was put up for sale last April but was pulled from the market five months later due to “market conditions”.