Q1 Homes quizzed on reliance of ‘future work’

Q1 Homes quizzed on reliance of ‘future work’

When companies collapse, there are often investigations into their recent finances to understand what happened to lead to their insolvency. On October 1st, Queensland One Homes was under scrutiny in Brisbane’s Federal Court, which collapsed in 2017 with over $5.8 million in debt. Menzies Advisory has been working with Q1 Homes since 2017 as their appointed liquidator.

The original article was published on 1st October 2019 in The Courier Mail Digital Edition. To subscribe, visit https://www.couriermail.com.au/. We’ve reproduced the article here for our website visitors.

Q1 Homes quizzed on reliance of ‘future work’

Queensland One Homes remained solvent the year before its collapse despite mounting debts and a heavy reliance on the value of “future work” to maintain its building licence.

That was the testimony of Q1 Homes sole director Paul Callender who appeared in the Federal Court in Brisbane yesterday for the first day of a fiveday public hearing into the collapse of the Gold Coast company.

Q1 Homes collapsed in 2017 owing more than $5.8 million to creditors, including more than 130 tradies.

Edward Moon, appearing as counsel for the examination, told the court a financial statement for 2016 financial year showed Q1 Homes had a profit of $1.28 million at the same time as work in progress (WIP) surged from $1.845 million to $4.023 million.

To be licensed by the Queensland Building and Construction Commission, builders must meet what are called Minimum Financial Requirements (MFR) to ensure they have enough asset backing to start and finish building projects. WIP, or jobs that have yet to be completed, can count towards the net tangible assets of a builder, which makes up part of the MFR.

Mr Moon asked MrCallender how could WIP have increased by such a great deal?

“It just comes down to when the contracts come through. You might sign a contract in 2014 and building doesn’t start until late 2015,” MrCallender responded.

“Do you recall manipulating that figure?” Mr Moon asked.

“I don’t manipulate figures,” MrCallender said. Mr Moon asked whether the company would have been able to have a QBCC licence if it had WIP of $2 million. Mr Callender said the company had “other means of passing the financial test”. Mr Callender was asked on what basis he considered the company solvent when it had cash in the bank of $1.14 million and owed trade creditors $2.56 million.

“We were always able to pay down our debts,” Mr Callender said.

Menzies Advisory

Menzies Advisory Liquidation & Receivers are Certified Practicing Accountants and Registered Liquidators with over thirty years’ experience in commerce and insolvency. Company directors, accountants, lawyers and business consultants turn to us for expert, compassionate advice in difficult times. Our professional consultants implement the most practical solutions to meet your complex business and financial issues.

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