A matter of Integrity: Building company's $1-million debts
STANDING outside his unfinished house, two years since his slab was poured, frustrated homeowner Bhaskar Somnath has been left out-of-pocket by the recent collapse of Integrity New Homes Coffs Coast.
Five other families, with stalled builds, await homeowners warranty insurance claims while 80 creditors, most of whom are small business sub-contractors have been left to carry debts totalling $1-million.
A recent meeting of creditors has been told the company changed its name to Santech Pty Ltd in April, after the parent company Integrity New Homes terminated its franchise agreement in July.
"The directors have advised the company's main reason for insolvency was due to insufficient cash flow and a number of legal disputes," liquidator Adam Ward told creditors now that the voluntary liquidation of Sandtech has revealed little prospect of returns.
THE walls are up, the roof is on, but there is no front door and tall weeds now grow where construction fencing stood around Somnath Bhaskar's new house.
For the local restaurant owner his family home was meant to be the reward for a lifetime of hard work.
Alarmingly he is not alone, now comparing tales of loss with five other families who's lives have been disrupted by the collapse of Santech Pty Ltd, run by Michael Worthing and Geoffrey Saunders.
"We have been waiting for the directors to take action after the franchise was taken from them," Somnath said.
"We were never told what was happening with the company. We have invested so much money and they took the last bank payment, but never finished my home.
Somnath is hopeful an insurance assessment of his property will be completed within a month before a tender is awarded to another builder to complete the job, but he doesn't expect a handover for months.
"We have lost so much money, so much time and with that has come so much emotion," he said.
"I have worked hard to get ahead in life, but these builders have done an unbelievably wrong thing to us.
"I paid them $60,000 to finish my house, but they have not used that money here.
"Then they just said look we are liquidated and explained if I paid the suppliers they would get someone in to finish the job," he said.
Creditors have been told the company owes debts totalling $1,001,011.25 and in terms of assets holds no money in the bank, but does have $208,232 owed by trade debtors.
Two individuals are owed $200,000 and $40,000 respectively.
Two separate designer kitchen firms are owed $57,115.20 and $33,098.87, a frames and trusses firm is out of pocket $53,822.08 and a metal roofing firm $35,237.42,
The National Australia Bank is also owed money by the company, along with the Australian Taxation Office, while staff superannuation payments also remain outstanding.
Statement from Integrity New Homes parent company
INTEGRITY Franchising Pty Ltd is the former franchisor for Santech Pty Ltd, which went broke in November while trading as Integrity New Homes Coffs Coast.
Responding to The Advocate's questions, Integrity Homes' Glenn Leet stated:
"We are deeply concerned by the failure of Santech not to complete homes for some clients and also not to pay outstanding creditors, noting Integrity Franchising is also owed a substantial sum.
"Integrity Franchising has worked with Santech for some time to provide suggestions for operations but ultimately had no alternative but to terminate the franchise agreement on July 16 after first issuing a breach notice to rectify," Mr Leet said.
He said Integrity Franchising appointed a new franchisee to take over several sales to ensure a good outcome for some of the existing clients and had waived royalties on a job.
The new franchisee business has been trading as Integrity New Homes Coffs Coast, but it is a totally independent company from Santech Pty Ltd.
"None of the Santech Pty Ltd directors, shareholders and employees are associated with the new Integrity New Homes Coffs Coast franchised business," Mr Leet said.
He noted Santech Pty Ltd directors Geoffrey Saunders and Michael Worthing were experienced in the building industry prior to starting their franchise four years ago.
"One of the directors has previously owned and operated a building company and another director was a successful new-home sales consultant in Coffs Harbour for around three years before acquiring the franchise," he said.
"The franchisor has made every effort allowed for under the Franchise Agreement, and by Santech's directors, to assist Santech, but the day-to-day running, management and decisions surrounding the business rested solely with the Santech's directors.
"Integrity Franchising did point out areas of concern in the Santech business operations when we became aware of them, but we did/do not have the contractual/legal nor building licensing regulations ability to become directly involved in addressing matters for Santech in a hands-on fashion.
"The franchisee remains an independent company using its own building licence to build new homes," Mr Leet added.