Embattled Perth builder Modco Residential enters into voluntary administration blaming industry challenges

Embattled builder Modco Residential will enter into voluntary administration, issuing an emotive statement blaming industry challenges and the media for the collapse. By appointing GTS Advisory, Modco is likely avoiding a forced administration, with at least two unpaid creditors seeking to wind up the company in a legal matter that was last week delayed until August. In a statement to be issued on Monday, director Damien Clancy apologises that the company — which was founded by glamour couple Cynthia Lu and Yusuf Khan — could not meet its commitments. But the letter falls short of taking any responsibility for the collapse. This is despite some trades claiming they were not being paid six-figure bills from as early as April 2022, only eight months after the exclusive VIP launch party, attended by Perth’s supercar driving A list. “Despite our efforts to overcome adversities expected in building a growing business, the rapid and unforeseen external challenges ranging from unprecedented industry challenges, perpetuated by a series of controversial articles that created distrust amongst stakeholders became an insurmountable challenge,” the letter states. “What initially started as a nationwide industry challenge of increased costs of materials and labour and shortage of skilled trade forcing many builders into administration in the past financial year, was then exacerbated by the intense media scrutiny targeting Modco Residential creating distrust amongst our trades, vendors, staff, shareholders, clients and the industry insurer QBE. “This caused significant strain on business operations and made it exceptionally challenging for us to acquire skilled tradespeople, retain staff and continue our operations.” Mr Clancy’s letter also states:” “In this moment of profound sadness for all that have been affected, we hope the close of Modco will be a catalyst to highlight the need for systemic change and industry support to address the issues that persist within the construction sector. “The administrator, GTS Advisory will be in contact with all stakeholders. “In the face of adversity, we say goodbye with heavy hearts.” The West Australian newspaper revealed on May 20 this year the company was being evicted from its Osborne Park headquarters after not paying rent for four to five months. About ten days later, State Government watchdog Building and Energy issued a consumer warning that Modco was not paying its bills, claiming it was investigating whether the company had enough money to meet its financial obligations.