Around 2,700 jobs could be lost from the mechanical businesses operated by Hastie Group following moves by the troubled engineering firm to appoint a voluntary administrator.
Administrator PPB Advisory, who was appointed on Monday, says there are insufficient funds to operate the company’s mechanical, electrical and plumbing businesses in Australia, and that operations in those businesses have been suspended.
“Regrettably, the administrators have no option but to suspend operations whilst they assess the financial position of each company” PBB said in a statement.
“The administrators will make every effort to assist employees”.
Hastie, which provides services to the construction industry including electrical, plumbing and refrigeration, had until last week been in talks with lenders with regard to recapitalisation proposals after the company acknowledged that an anticipated $58 million profit in the current financial year had been effectively wiped out by asset write-downs.
Those talks broke down, however, following revelations of accounting irregularities whereby the company discovered that an employee had falsified accounts, resulting in a further $20 million hit to the company’s bottom line.
Hastie’s Australian businesses include Spectrum Fire and Safety, Hastie Services, Gordon Brothers Industries and Austral Refrigeration.
The latest collapse follows the collapse of St Hilliers Construction, the company which was building the Ararat Prison in Victoria and several housing projects in New South Wales, as well as a number of other building and construction related firms earlier this year.
PPB says the moves to suspend operations in the above-mentioned businesses operated by Hasties was ‘particularly disappointing’ but necessary given the extreme financial situation of the group.
“We are obliged to confirm Hastie Group’s ability to fund trading before we can resume business” PPB Advisory Chairman of Partners, Ian Carson says.
“We need time to assess the details of the situation and to determine the viability of the ongoing businesses. In the meantime, we remain acutely aware of Hastie Group’s role on major construction projects and are assessing those urgently. We will provide an update to employees and other affected parties as soon as possible”.
PPB says that entitlements have priority for payment from the proceeds of certain asset realisations. The administrator says it is unsure of the asset values, but in the event there are insufficient funds and the companies within Hastie Group are wound up, employees will be entitled to lodge a claim under the federal government’s General Employee Entitlement Redundancy Scheme.