Embattled builder Modco Residential could allegedly owe about $5 million to up to 50 creditors as its co-founder spruiks interest in reviving the collapsed residential building business.
Embattled builder Modco Residential could allegedly owe about $5 million to up to 50 creditors as its co-founder spruiks interest in reviving the collapsed residential building business.
Modco has been the subject of a slew of accusations from homeowners and contractors over its ability to pay its debts in the past six months, including legal action launched by one alleged unpaid creditor.
The minutes from a creditors meeting on August 3 revealed that initial enquiries indicated there were up to 50 creditors with claims totaling about $5 million, according to the administrator's report.
That includes a secured debt claim estimated at about $2.1 million, subject to review, from Modco’s co-founder Cynthia Lu, who launched the residential building business with her husband Yusuf Khan during the pandemic.
The minutes also revealed that Ms Lu, through her business entity Ms Lu Holdings, wishes to resuscitate the condemned venture after putting forward a deed of company arrangement.
The details of the DOCA have not yet been revealed.
But Modco is set to face court later this month after a winding-up application was made by alleged unpaid creditor Torquejobs which claims it's owed $28,112 from three unpaid invoices.
The court date is scheduled for later this month, which may squash Ms Lu’s plan to revive the failed business given her bid would need approval from creditors.
One creditor who has worked with Modco, Riviera Homes WA, alleged it's owed $1.75 million from the company, according to the minutes.
Another creditor, Lam Property Development Group, claimed it's owed $1 million from the Osborne Park-based builder.
But both major creditors’ claims were subject to debate as the administrators were in doubt as to whether the debts should be admitted or rejected.
Other creditors present at the meeting claimed they were allegedly owed amounts ranging from about $10,000 and $348,700, with the latter alleged by the Australian Taxation Office.
Namely, Easy Access Scaffolding was claiming it was owed $89,000, Pratt Plumbers alleged its owed $37,500 and Fost3r Carpentry was claiming $21,000 in alleged unpaid debts from Modco.
Modco ceased trading in May and had just $300,000 in assets and its account was overdrawn by $900 at the time of GTS Advisory’s Mathieu Tribut appointment as administrator in July.
At the same time, it appeared Modco had 18 ongoing building projects, the minutes revealed.
Modco cut its staff from 33 employees in the 2022 financial year to only a single staff member in FY23.
