Construction company folds with debts near $200k after boss starts afresh

Monday, 28 September 2020

Jonny Collett, pictured working as a painter and decorator in 2009, remains in business after his company collapsed.

Tradespeople left thousands of dollars out of pocket by a construction company collapse are angry its owner remains in business under another name.

Christchurch builder Jonny Collett put his company, JE Collett Builders Ltd, into liquidation this month owing close to $200,000. Known creditors include Inland Revenue and about 30 businesses – many of which are subcontractors and suppliers.

Collett is now running Collett Construction Ltd, which he formed in May, about the same time he stopped paying his other company’s bills.

The Companies Act says a director cannot run what is known as a phoenix company – one trading in the same business using the same or a similar name as their failed one – before or within five years after the liquidation.

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Electrical company owner Dayle Condliffe is owed $15,000 after completing work in January on one of Collett’s Christchurch sites.

“I gave him a bit of breathing space because everyone was struggling with the lockdown,” Condliffe said.

For three months Condliffe got no reply to his emails, phone calls, and text messages seeking payment, he said.

“When all communication stopped, that’s when I realised. He wasn’t paying invoices and he’d already started another company.”

Condliffe then served JE Collett Builders Ltd with a statutory demand – a court document requiring payment – and several days later Collett put the company into liquidation.

The outstanding sum represents half a week’s wages for Condliffe’s staff.

“It just doesn’t sit right that this can happen, that he’s already started a phoenix company and is continuing to trade as a builder.”

The fist liquidator's report for JE Collett Builders Ltd lists about 30 creditors.

Builders had “all the power” because they held the contract, Condliffe said.

“They don’t know how to run a business and they basically use subbies like a bank. All these family businesses are getting shafted.”

He has now lodged a complaint with the Companies Office.

Liquidator Brenton Hunt’s first report for JE Collett Builders lists the reason for insolvency as an incorrectly priced contract “which led to a sizeable loss and pressure on working capital”.

It lists a $190,000 shortfall to creditors, an overdrawn current account, and one computer as the only known asset.

“Motor vehicles used by the company were leased off a related party, therefore not owned by the company,” Hunt’s report says.

“… the liquidator estimates that there will be no funds available for unsecured creditors”.

Collett Construction is the same name of a previous company, which Collett wound up in December.

A subcontractor, who did not want to be named, said he was owed a “substantial amount” by JE Collett Builders and still had to pay his staff and suppliers.

“He [Collett] never once sat down and said, ‘This is the situation.’ He just ignored everybody and we’d never get a call back.

“He always said what a family man he was, but he has taken from me and my children and my wife.”

The subcontractor said it was “a flawed system” when people could put their business into liquidation and start up again.

In an email to Condliffe, liquidator Hunt said the company’s assets had been “sold prior to liquidation when the new company was set up”.

The law prevents directors of liquidated companies from continuing under a similar or same name. (File photo)

“I am waiting on details about what valuation was done for the sale etc.

“I can’t stop [a] director forming a new company but I obviously can investigate any related party transactions, which I am doing.”

Collett’s new website lists House of the Year awards from 2017 and 2018 and testimonials from satisfied customers, including former Christchurch mayor Sir Bob Parker’s wife, Lady Jo Nicholls-Parker.

The site claims Collett Construction has been “a proud member of Master Builders since 2013”.

Registered Master Builders general manager Bronwyn Millar said the previous Collett Construction was a member from 2017 and pulled out in March 2019, while JE Collett Builders was expelled from the organisation when it went into liquidation this month.

“We have very clear rules regarding members when there is a liquidation. They cannot set up a new company to become a Master Builder,” Millar said.

May Moncur, an Auckland law employment advocate, believed too many businesses were using liquidation as a way of avoiding their liabilities.

“They keep the business running by starting up another company, and continue as normal. In New Zealand, putting a company into liquidation is so easy and not expensive.

“There is a loophole in the law.”

Collett has not replied to messages from Stuff seeking comment.