Shortage of materials final nail in the coffin of building company

Monday, 22 November 2021

Logan Townsend, the director of Homes by Maxim, says his company’s collapse will be followed by others.

The collapse of Christchurch building company Maxim Design has left home buyers uncertain about the fate of their unfinished houses and unsecured creditors $3 million out of pocket.

The company, trading as Homes by Maxim, was put into liquidation by its shareholders Logan and Maria Townsend last week, with accountant Brenton Hunt appointed as liquidator.

The residential home builder, specialising in design and build, left 14 homes unfinished and five contracts not started.

Master Builders on Monday confirmed some homes were covered by a Master Build 10-year guarantee but could not say exactly how many.

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Its chief executive David Kelly said his team was working with the liquidator and had been in touch with most of the homeowners.

Homes by Maxim has gone into liquidation and the owner says others are on the way.

The liquidator’s report, released on Monday night, shows trade creditors are owed $3m, with the shortfall to all creditors estimated to be $3.2m. Staff are owed $50,000 in holiday pay and wages and Inland Revenue is owed $500,000 in GST and PAYE.

Are you among those affected? Email martin.vanbeynen@stuff.co.nz

In the report, Hunt said director Logan Townsend had told him the company had invested a large amount in a subdivision project that didn’t eventuate.

“The company has been struggling with working capital for a number of years but was hopeful it could work its way through everything,” Hunt said in the report.

“Covid-19 lockdowns put an additional pressure on working capital which led to a number of suppliers putting the company on stop credit.”

Townsend had also informed him that delays in getting product had put additional pressure on the solvency of the company. Hunt said it was not possible to provide a definitive answer on whether creditors would receive any money.

Some of the company’s creditors told Stuff the company had been a slow payer for a long time, and pointed to other builders who are coping.

David Moot, owner of David Moot Electrical, which is owed the “fat end” of $80,000, said the supply reasons given for the crash did not wash with him.

The company had been behind in its payments for five years and was always a worry, he said.

“It’s a bittersweet thing. I hoped this wouldn’t happen but sort of knew it would at some stage. It’s been mentally taxing.

“I’m disappointed because Logan always assured us there was plenty of work in the pipeline, and he wouldn’t do this to us.”

His company, which employs 15 people, would survive, but he felt for smaller operators who would need to increase their mortgages, he said.

Bill Doornenbal, a part-owner of Rangiora Plumbers, said Maxim owed the firm about $40,000. The debt would make life a lot more stressful for the firm, which employed his son and two apprentices.

The firm worked with other builders who were paying their bills as usual despite the shortages, so he did not find the reasons given by Townsend convincing.

Townsend said he had injected close to $2m into the business to “try and ride it through”.

“This is a business we have operated for 10 years. The decision [to liquidate] did not come easy,” he said.

“We have absolutely tried to make this work … ultimately the decision has been made to minimise the exposure for people. This is one of the early failures, but there are plenty more to come.”

The company had $9m of profitable work in the pipeline but the shortage of materials and council processing delays meant the company could not bridge the time delays.

Asked how bad the company’s position was before the lockdowns, Townsend said the company had been “working through” its problems.

“Double-Covid certainly didn’t help and the second Covid lockdown made a massive difference to the supply chain.”

Carter Holt’s delays in supplying timber frames were the real “game changer” for the business, he said.

Townsend said he would be looking for a job in a different sector.

“It’s been really tough. I put 10 years of my life and our savings into the business to have it fail and that has taken its toll on me and my wife.”