Investigation deepens into Schlager Homes after Albany builder goes into liquidation owing $2.75 million

Liquidators are probing the trading history of Schlager Homes over the past three years as WA’s Building Commission investigates claims against the collapsed Albany builder. Schlager Building Services, trading as Schlager Homes, was placed into liquidation on Tuesday last week, owing an estimated $2.75m to creditors and leaving about 30 homes unfinished, including five in Albany. Since then, the Advertiser has spoken to several local subcontractors who claim they are owed up to $50,000, and a single mother of two from Perth who says her first homebuilding experience has been a nightmare. The collapse of the award-winning Albany home builder came after the commercial arm of the business, Schlager Group, trading as Schlager Construction, went into administration in mid-April. Insolvency firm Avior Consulting was appointed to lead a restructure of Schlager Construction, which was completed last month, saving 11 jobs and realising payments to some creditors. In that period, subcontractors for Schlager Homes started to get nervous, but some say they were told the homebuilding business was unaffected. Now, Avior Consulting is the liquidator for Schlager Homes. Avior Consulting principal Dermott McVeigh said he could understand why subcontractors were confused and unhappy about that sequence of events. “Schlager Homes was part of the group of companies led by Schlager Group Australia; however, the director of Schlager Homes decided not to place it into voluntary administration when other entities in the group did so in April. “The director of Schlager Homes attempted to restructure Schlager Homes by himself; however, after engaging with the company’s customers he determined that the restructure could not succeed. While this delayed the failure of Schlager Homes, it didn’t change the company’s ultimate position, which was that it needed to cease trading and be liquidated. “A major focus of the investigation is whether any creditor’s position was aggravated during this period.” Mr McVeigh said he expected to make a report to the Australian Securities and Investments Commission in “the very near future”. “I anticipate providing a report to the ASIC and ... requesting its assistance to progress my investigation through a court examination of the company’s directors and the company’s former accountants,” he said. He said Avior Consulting was also looking into the company’s compliance with its insurance obligations. WA’s Building and Energy confirmed it was “urgently investigating” complaints. Building and Energy executive director Saj Abdoolakhan said anyone who thought they had made a deposit of more than $20,000 without the required paperwork should contact Building and Energy on 1300 489 099. Perth woman Vicky Wilson, who is living out of a rental home, said she made a $21,000 deposit in January on a $250,000 home in Mosman Park. The single mother of two said by the time Schlager Homes went into liquidation, it had not obtained planning approval. “There was really no progress for the past five months,” she said. “I really feel for the other people who are building. “At least I can walk away and find someone else.” She has contacted Building and Energy and the Australian Securities and Investments Commission, and she is speaking to a lawyer about her concerns, but she is not confident she will get her money back. “I haven’t tried to build a house before. I don’t think I’d do it again,” she said. Mr McVeigh said Avior Consulting was in negotiations with several builders and expected to present homeowners with options next week. In Albany, where Schlager Homes was founded, subcontractors are united in their view the State Government needs to increase protection for subcontractors. Late last month, the State Government introduced the Building and Construction Industry (Security of Payment) Bill 2021 into Parliament, which would protect retention money from being misappropriated or lost through insolvency. Chris King from King’s Plumbing said he was owed about $48,000 by Schlager Homes and expected to see none of it. He said it was the third time he had been burnt by a company going into liquidation. He said greater protection for sub-contractors was a no-brainer. “They’ve been talking about that for a while. I’m a plumber so I just work my a... off,” he said. Gyprocker Ken Hastie said the collapse of Schlager Homes had left him almost $50,000 out-of-pocket. He said Schlager had always been “slow payers” but he was still shocked when it went into liquidation, especially because it happened so soon after Schlager Construction was restructured. Plumber Wade Marshall said he was down about $27,500 from four jobs. He said his dealings with Schlager Homes had deteriorated in the past couple of years, and he had been thinking about cutting ties months ago. “It’s disappointing. I need that money, it’s money I’ve spent on people’s houses,” he said. “I’ll be OK but I’ve got a partner and four children. “I’ve done the work, I’ve paid for the materials. “It would be good if subbies had more protection.” The Advertiser contacted Schlager Homes and was referred to Avior Consulting for comment.