Auckland housebuilder Sika Homes goes bust

Tuesday, 30 June 2020

Sika Homes won awards for its builds, including for this home in Onehunga.

Auckland housebuilder Sika Homes has gone into liquidation.

The company was paid $121,000 through the Government wage subsidy scheme, but was put into liquidation on June 18.

Liquidators Steven Khov and Kieran Jones said they had been advised Sika Homes' failed because excessive labour costs and other project cost overruns eroded profit and margins resulting in an unsustainable business model.

'We are advised by the director that cost overruns totalling over $400,000 across two specific projects have caused the Company’s cashflow to become expended,' they said in their first liquidation report filed with the Companies Office.

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'The company has not been able to recover sufficient profitability to sustain the servicing requirements of its overall liability position. Following the exit from Level 4 Lockdown due to Covid-19, the shareholders have assessed the financial position of the Company and elected to place the company into liquidation,' they said.

Khov and Jones had requested the delivery of the company’s books, records and legal files, and had frozen the company’s bank account and issued notices to the secured creditors asking for details of their debt and securities.

The liquidators had also attended the four construction sites the company was completing and locked them down, the report said.

The liquidators' report showed debts of just under $400,000 were owed by the company to creditors.

These included finance companies UDC and Nissan Financial Services as well as the Inland Revenue and Sika employees.

A search of the Government's wage subsidy database showed Sika Homes was paid $70,296 in wage subsidies for 10 people during the first phase of the subsidy scheme, and a further $51,550.40 for 11 employees under the extension of the scheme.

The liquidators said it was too early to comment on any recoveries and the likelihood of a distribution to creditors.

Skia Homes website describes the company as: 'Experts in architectural new builds, renovations and reclads. We are award winning Master Builders and Licensed Building Practitioners.'