Melbourne-based company MadeCo, which was responsible for kitchen manufacturing, went into voluntary administration with 30 employees impacted.

Its failure has left 70 creditors left with unpaid debts including $620,000 owed to employees for annual leave, long service leave and superannuation.

Paul Langdon and Ian Grant from LangdonGrant were appointed as administrators in March.

A “chain reaction” from two other companies that went under, which owed MadeCo a total of $520,000, forced the company into voluntary administration, Mr Langdon told news.com.au.

“The company was having financial difficulties for quite some time, but an insolvency event last year with one of those companies that owed $400,000 – that was a bit of tipping point,” he explained.

Mr Langdon added that MadeCo was another victim of the construction industry, which continues to be plagued by a cost crisis.

“In essence the company which operates in the construction space – and the construction space always has financial difficulties, especially through and on the back end of Covid and general economy issues like increasing supply costs, wages, the supply of labour, getting staff and all those sorts of things – it was those sorts of things that impacted it,” he said.

“But in addition two of their customers went through insolvency and owed a significant amount of money, which hasn’t been paid, so there has been a chain reaction.”

Mr Langdon said there were a number of building and installation of kitchens that were still pending and a “fair few” had been completed after MadeCo’s collapse – but no deposits were outstanding as people paid once the job was complete.

“There is a minimal impact to customers but obviously there is an impact as people have made an order and are waiting on it and there was a lot of different orders,” he said.

“Obviously it’s very difficult if you have placed an order and they wait a month or two for your kitchen and then you are told you are not going to get your kitchen.

“The impact is not a financial impact but certainly it’s a very frustrating process for customers that have to go elsewhere – it’s inconvenient.”

MadeCo announced on social media that is was with “heavy hearts” that it had made the “difficult decision” to go into voluntary administration on March 20.

“At MadeCo we’ve weathered many storms, but unfortunately, some waves hit harder than others. The challenges brought on by the pandemic were tough enough, and the recent downturn in the cabinetry market, coupled with the closure of two major account clients has made our journey even more arduous,” it revealed.

A creditors meeting on April 17 is likely to see the 18-year-old company tipped into liquidation, Mr Langdon said.

He added creditors included other trades, financiers and the Australian Taxation Office and it was still too early to say if any of their money would be paid.

“The company has ceased trading now and it is clearly insolvent and I have recommended to creditors that they place the company into liquidation,” he said.

Very difficult times

There is no reprieve in sight for the construction industry, which has experienced a torrid few years with hundreds of companies going under.

News.com.au has reported on dozens of builders going into administration and liquidation over the past two years.

In times of economic hardship and inflation, building companies are usually the first to feel the pinch as they run on such small margins.

A staggering 2349 construction firms have collapsed in the past year — with fears more may fall soon.

Indeed, of the 8471 business collapses for 2023, almost 28 per cent were in the building and construction industry, according to data put out by the corporate regulator.

Mr Langdon said the industry continues to face difficulties.

“It’s had issues to do with supply challenges, labour, competition for labour – a lot of staff have gone on to government projects in the city with the rail and the tunnel (in Melbourne) – and with interest rates, it’s a very difficult industry,” he noted.

“There is also that chain reaction in the construction industry with the stakeholders that you work with having financial difficulties and that chain reaction like suppliers and subcontractors – and if you have a builder fall over and if they don’t pay you and then you can’t pay your debtors.

“There’s obviously a lot of big builders that have failed like Probuild, Porter Davis, Lloyd Group – bigs one and there are huge amount of small ones falling over. We see it every other week and for this company MadeCo, they had two debtors go into external administration and cost them $500,000.

“I think its always going to challenging for a variety of reasons – just the cost of materials the access to labour, the interest rates, the cost of living – everything is very expensive and very difficult and I don’t see it changing in the short term.”

Millions owed already

Recent collapses include workers at two NSW factories who slammed their former employer after the company went bust, leaving them and other creditors multiple millions out of pocket.

In February, Cubitt’s Granny Flats and Home Extensions announced that it had made the “devastating decision” to put itself into voluntary administration with $5.6m in liabilities, while a company involved in the construction sector collapsed with just $6 left in its bank account and now owes creditors more than $2 million.

A global company LVX involved in the construction sector and headquartered in Australia also plunged into administration earlier this month.

sarah.sharples@news.com.au