Builder of Tallowwood Townhouse in The Gap Goes Under Administration

Shafston Avenue Construction Group, the troubled Brisbane construction group responsible for high-profile projects such as The Gap’s Tallowwood townhouse development, has accumulated debts totalling over $70 million, including a substantial amount owed to the Australian Taxation Office, which is now seeking payment. 

The construction company, founded almost a decade ago by developer Murray Thornton, has recently been placed under administration due to its mounting financial obligations to the ATO and other creditors.

Duncan Clubb and Jeffrey Marsden from the accounting firm BDO were appointed as administrators earlier this year to oversee the affairs of the troubled construction group. No work has been performed by the company since it entered administration.

Creditors of the construction group will gather in early July 2023 to vote on a proposed rescue plan for the company. The plan, called a deed of company arrangement, aims to either recapitalise or restructure the group. If approved, it could provide a path forward for the troubled company.

According to a report filed with the Australian Securities and Investments Commission (ASIC) by Mr Clubb, the group’s outstanding debt to the ATO amounts to approximately $15 million. This debt was accumulated after financial support that was expected from related companies was not provided. 

The report highlights the company’s unsustainable business model, where construction work was undertaken on behalf of related unit trust companies and then invoiced to them. However, the lack of additional margin for the provided services made this model financially unsustainable.

Mr Clubb’s report also sheds light on the company’s misleading financial situation. While the group appeared solvent on its balance sheet due to the large amounts of work in progress, it failed to convert this into liquid cash at any stage. The group relied heavily on arrangements with related parties for funding or invoicing, which ultimately proved insufficient to address the significant tax debts.

Mr Thornton is still a shareholder but ceased being a director of the group companies in June 2021. A spokesperson stated that he had no direct involvement in the companies despite remaining a shareholder. The current director, William Rhodes, declined to comment on the matter.

Published 30-June-2023