The director of a collapsed Ballina building firm told Echonetdaily that he tried to sell the company to its franchisor to pay off his debt to tradespeople. But the head of the franchise has described his demands as ‘totally unreasonable’.
C and E Structures’ director Michael Hodgkinson has spoken for the first time since the collapse of the GJ Gardner Ballina franchise, claiming that his company tried to repay the money owed to tradesmen.
The franchise was terminated by the statewide GJ Gardner office last month, and Mr Hodgkinson confirmed to Echonetdaily that the company owes an estimated half a million dollars. ‘About half is owed to tradespeople, the remainder to suppliers,’ he said.
He believes that he and Mr Eagles are among C and E Structures’ largest creditors, having injected funds into the business to keep it afloat.
While he admits that tradespeople have been left seriously out of pocket, he denies that debts were run up wilfully or recklessly.
‘In the building game, there are seasonal cash-flow problems and we were experiencing one in August.
‘In the past an investor helped us to cover the shortfall, but he was caught up in the collapse of a super fund and unable to finance us that time around.
‘Rather than get in deeper we approached the GJ Gardner Tweed Office. At the time we had six or seven unfinished homes and four new homes on the books.
‘Completing all of those would have seen $250,000 in profit, so in late August we offered the Tweed office our franchise for $250,000.’
Mr Hodgkinson says they intended to use the money to pay out the tradespeople.
‘We opened our books to Tweed and NSW head office. They came back to us with an offer of $75,000.
‘We refused it,’ he said.
It was then, according to Mr Hodgkinson, that GJ Gardner NSW terminated the franchise. The NSW office initially agreed to allow C and E Structures to complete the homes, but Hodgkinson says, ‘At that stage head office knew we weren’t in a position to’.
While Mr Hodgkinson acknowledged that it’s hard to find a buyer for a failed business, he says that he and Mr Eagles attempted to exit the business in a manner that would allow them to pay out the tradespeople.
NSW office responds
However, Matthew Hope of Gardner’s NSW office says that the unfinished houses on Ballina’s books were a $400,000 liability and that Ballina were ‘completely unreasonable with their demands’.
He also provided Echonetdaily with an email from Mr Eagles asking head office to write off $133,000 in franchise fees. ‘We were left with no option but to terminate our relationship with C and E Structures Pty Ltd given the amounts owed under the franchise agreement and the growing number of complaints,’ he said.
‘Our Tweed Heads office is now trying to assist customers to complete their homes with the assistance of the Home Owners Warranty Scheme.
‘We have also met with the local tradespeople to assure them that they will be given the first right at any upcoming work in completing these homes,’ said Mr Hope.
Mr Hodgkinson expects to face a court-appointed liquidator in the near future.