Liquidators appointed to take over collapsed Victorian home builder Porter Davis have warned some customers who had paid a deposit, but not had works begin, have been left uninsured.
Porter Davis announced it had gone into liquidation last week, with an estimated 1,700 unfinished homes initially reported to be caught up in the collapse. On Tuesday, liquidator Grant Thornton said it believed the number of affected projects was 1,500.
The construction company has since made more than 400 staff redundant and has ceased work on building sites across Victoria and Queensland.
Accounting firm Grant Thornton were appointed liquidators on Friday and have since been scrambling to find a potential buyer that would be interested in acquiring the business and taking over building contracts.
Speaking to a packed online meeting, liquidators told hundreds of disgruntled customers they were in talks with several builders who had expressed interest in taking over Porter Davis, with an outcome expected to be known by next week.
"We expect that in the next week we'll be able to provide some clarity to customers on the outcome of the sales process, if anyone will step into Porter Davis's shoes and if so, on what terms and conditions," Grant Thornton liquidator Said Johani said.
Former customers left in the lurch by liquidation
Corey Wemyss is one of the Porter Davis customers anxiously waiting for some clarity from liquidators, just a month after work began on his new home.
“Suddenly we get the news on Friday morning that they don’t exist anymore and good luck having a home now,” Mr Wemyss said.
Sensationally, this is not the first time Mr Wemyss has been the victim of a building company gone bust, having experienced similar circumstances when building his first home.
“My first home also had a builder go bankrupt halfway through it, it didn’t feel real. It felt like I was in a dream, that it was happening for this second time," he said.
Following the collapse of Watersun Homes in 2017, his build was eventually picked up by Mega Homes, another building company that would go bust just two years later.
Mr Wemyss said it was lucky work had only just begun on his new Porter Davis property.
“If it had been two weeks later, I would have put down 120 [thousand dollars] for my slab completion, and then I really would have been in the hole," he said.
But for Mr Wemyss and his family, the uncertainty of situation meant an anxious wait in the coming weeks.
"When is it going to happen? Me and my wife, we need to sort things out. Where are we going to live in 18 months if this thing takes two years to figure out?" he said.
"It’s put a bad taste in my mouth with builders these days."
Liquidator warns of 'extreme' insurance cover gap
Liquidators said many customers who had paid a deposit, but not had work begin on their build, were left uninsured.
"There are a number of customers who have fallen into that gap — between paying deposit and work not yet starting on their site because they're awaiting their permit — who may not have insurance cover," Mr Johani said.
"[For these people] it's extreme. It means you do not have any insurance cover and it means the deposit you have paid has been lost."
He said Grant Thornton was working with the Victorian Managed Insurance Authority (VMIA) and the Queensland Building and Construction Commission (QBCC) for alternative solutions.
Customers can lodge insurance claims with either insurance company, depending on what state they live in, but were warned their claims may take several months to be processed.
The government said there were about 500 people who had contacted the VMIA seeking insurance claims. While Porter Davis has insurance, it is unclear if it would have capacity to respond to claims.
Customers told to brace for delays
Mr Johani told customers the delay on their build would depend on how close it was to completion.
He said the liquidator's focus would be on finding an efficient solution for the 240 homes that were in the final stages of completion.
Those in the initial phase of construction, with permits approved or slabs poured, were warned to brace for hefty delays.
"Unfortunately, once the deposit has been paid, those funds go into general working capital for the business and it's not possible for those funds to be refunded," he said.
"[I want to acknowledge] how incredibly frustrating it must be for customers and how emotionally charged it would be."
Meanwhile, customers considering terminating their contract and changing builders were warned of price hikes on contracts across the industry.
"There were a number of reasons that led to the collapse of Porter Davis … rising input prices, rising cost of trades, lack of availability of trades, all those against the backdrop of contracts signed months or years earlier means the cost to build a home has increased," Mr Johani said.
"Across the whole industry, prices have increased; a builder will seek a high price to reflect a higher cost."
Police investigate 'suspicious' fire at Porter Davis site
Meanwhile, a two-storey Porter Davis property that was near completion was found engulfed in flames in Melbourne's south-east on Monday afternoon.
Police said the fire was being treated as suspicious.
It is not known whether the fire was linked to the builder's demise.
At the liquidator's meeting, Mr Johani said he had heard reports of some contractors, suppliers and other parties accessing people's unfinished homes.
"You're not damaging Porter Davis, you're actually damaging the customers here," Mr Johani said.
"They are quite frankly the victims of this liquidation."
