A building company that collapsed suddenly leaving $10 billion worth of government projects up in the air was owed $350 million by its parent company, which could be hard to recover, according to administrators.
Perth-based Clough Group went into voluntary administration earlier this month butThe Australian reported it may be difficult to recover the $350 million owed to the contractor by South African parent company Murray & Roberts.
Clough built industrial projects in the energy, resources and infrastructure sector, which has left a number of sites in the lurch including the Federal Government’s Snowy Hydro 2.0 expansion and other projects in NSW, Western Australia and Papua New Guinea.
But the company has received a welcome lifeline with administrators securing a $17.6 million deal to save most of its workforce through a part sale of its projects and assets to a company called Webuild that is a partner on the $5.9 billion Snowy Hydro 2.0 project.
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Webuild, an Italian contractor, is currently in negotiations with Deloitte over the part sale of the company, while it had also agreed to take on Clough’s “brands, business references, Australian organisation and certain projects”.
Other contractors may also take over current projects, although uncertainty remains over ones like the $2.3 billion Project EnergyConnect transmission line between South Australia and NSW, and Mitsui and Beach Energy’s $768 million gas project in Western Australia.
However, Deloitte administrator Jason Tracey said the firm had cut a deal with contractors to ensure work could continue and staff would still be paid, which had seen $11 million paid out to subcontractors so far.
“Those arrangements require the principals and clients to put money into our bank account, which is then held to pay employees and indirect overhead costs which relate to both employees, as well as fixed overheads,” he told The Australian.
“In effect we’re being funded week to week by the clients, and that means that the subcontractors and ordinary creditors of the company are getting paid.”
But court documents have revealed that Clough’s collapse has seen 850 creditors lodge a claim of up to $284 million.
There’s also $66.6 million owed to unsecured trade suppliers and subcontractors.
Administrators are hoping to secure deals for all projects to prevent the company going into liquidation.