A prominent Western Australian builder has issued an emotional statement as his company enters voluntary administration.
Modco Residential, a construction company founded by glamour couple Cynthia Lu and Yusuf Khan, has appointed Perth-based firm GTS Advisory to assist in navigating its unfolding collapse.
Director Damien Clancy apologises that the company, which specialises in steel framed homes, could not meet its commitments, with Monday’s statement blaming industry challenges and bad press for the collapse.
“Despite our efforts to overcome adversities expected in building a growing business, the rapid and unforeseen external challenges ranging from unprecedented industry challenges, perpetuated by a series of controversial articles that created distrust amongst stakeholders became an insurmountable challenge,” Mr Clancy said.
“What initially started as a nationwide industry challenge of increased costs of materials and labour and shortage of skilled trade forcing many builders into administration in the past financial year, was then exacerbated by the intense media scrutiny targeting Modco Residential creating distrust amongst our trades, vendors, staff, shareholders, clients and the industry insurer QBE.
“This caused significant strain on business operations and made it exceptionally challenging for us to acquire skilled tradespeople, retain staff and continue our operations.”
Mr Clancy hoped the event would be a “catalyst to highlight the need for systemic change and industry support to address the issues that persist within the construction sector”.
“The administrator, GTS Advisory will be in contact with all stakeholders.
“In the face of adversity, we say goodbye with heavy hearts.”
The company’s website claimed it built “faster than any other builder” with a focus on “innovative construction methods”, “modern finishes” and affordability.
In March, the state’s building regulator warned consumers of the company’s financial status.
“Building and Energy – WA’s building industry regulator – has received information from several owners, subcontractors and suppliers giving rise to concerns about the builder’s capacity to pay its debts as and when they fall due,” a statement from the regulator said.
“The fact that there are several court actions against Modco as well as reports about delays in completing building work are strong indications that the company may be under significant financial stress,” Building and Energy Executive Director Saj Abdoolakhan said.
Mr Khan and Ms Lu, a Perth glamour couple, established Modco Residential in August 2020 during the pandemic and building boom, aiming to deliver cost-effective, architecturally designed homes within a guaranteed 20-week build time.
Mr Khan, the director of private equity firm Perth City Investments Pty Ltd, has a background in development and construction.
Additionally, the couple jointly operates The Library Nightclub in Perth, which they acquired for $4.6 million in 2017.
The company is expected to avoid forced administration, with reports at least two unpaid creditors will seek to wind up the company in a legal matter set for August.
The West Australian reported in May that the company was being evicted from its Osborne Park headquarters after not paying rent for four to five months.