STCF president Graham Burke says it is likely that Mainzeal is holding millions of dollars in retentions, and called on liquidators BDO to be transparent about the sums.
“This is money that belongs to subcontractors and would have been paid out to them in due course but, because subcontractors are unsecured creditors, it is likely that this very significant sum will be used to pay secured creditors,” Mr Burke says.
“When Alliance Construction was placed into liquidation last year, the liquidators disclosed that it was owed $600,000 in retention payments, but owed over $1.5 million in retention payments to subcontractors.
“Given the significantly larger sums involved here and the high numbers of subcontractors affected, it seems reasonable that BDO should take a similarly transparent approach and disclose, in their report, the full extent of subcontractors’ money retained.”
In the wake of the Mainzeal collapse, the Federation has called for urgent changes to the practice of construction firms holding retention payments, either in the form of security for retentions held or the introduction of an alternative system, such as bonding.