Subbies, suppliers unlikely to be paid millions owed by failed builder

Administrators for Rork Projects have anticipated the more than $15 million owed to unsecured creditors will not be recovered, however employees may see some returns.

The 26-year-old building company, founded in the ACT, entered voluntary administration in early March.

Three related companies are now in administration: Rork Projects (Holdings) Pty Ltd, registered in the ACT, Rork Projects (QLD) Pty Ltd and Rork Projects Pty Ltd, both registered in Queensland.

The companies had about 63 active construction projects across Queensland, NSW, Victoria and the ACT at the time of administration.

It was one of a series of high-profile builder collapses in recent months.

Initial investigations into Rork Projects revealed the company has debts totalling more than $30 million.

At the time of the company's collapse, it employed 77 people and engaged three contractors, a report by administrators McGrathNicol stated.

The report found about $2.3 million is owed to employees, comprising unpaid wages for three days leading to the administration, unpaid superannuation during February and leave payments.

Administrators said if Rork Group goes into liquidation, a return to employees - who are the priority creditors - is uncertain.

They estimated a return to employees of less than 100 cents in the dollar.

Employees would be entitled to claim a portion of their entitlements through the federal government's Fair Entitlements Guarantee scheme, however this does not cover superannuation payments.

About $10.8 million is owed to secured creditors, those with a security interest registered against the company. Of that figure, $10.4 million is owed to the Commonwealth Bank of Australia, the report noted.

Administrators have estimated a return to secured creditors of less than 20 cents in the dollar.

About $15.1 million is owed to unsecured creditors, the report found, however that figure is likely to increase as investigations continue.

Unsecured creditors may include subcontractors, trade suppliers, utility providers, landlords and statutory authorities.

It is expected there will be no return to unsecured creditors in the event of a liquidation, the report found.

Another $2.3 million is owed to unsecured creditors that lent money to Rork Projects.

In a statement at the time of the company's collapse, Rork Group director Brian O'Rourke said high interest rates, labour shortages and material supply constraints had put builders "in crisis".

"This was the final step in a long journey to find a solution for our staff, clients and subcontractors, and we acknowledge the devastating impact this outcome has on them," he said.

In its report, administrators said other factors also contributed to the company's failure including several loss-making contracts in the last two financial years.

The report cited an "increasing rate of new project tenders being lost due to more advanced financial assessments being undertaken by project counterparties" and high overhead costs that were "not commensurate with the volume of revenue being won and delivered".

After posting a $500,000 net profit in the 2021 financial year, Rork Projects then reported a $4.3 million net loss the following year.

More recently, the company reported a net loss of $10.6 million for the 2023 financial year.

The directors began exploring restructuring and turnaround strategies from early-2023, the administrators found.

These included obtaining turnaround and safe harbour advice, tighter financial management processes and corporate reorganisation.

Rork Projects also secured additional capital from an associated entity in July 2023 and then from Commonwealth Bank in September 2023.

"Despite the above steps, the Rork Group continued to report material operating losses and was unable to return to a position of profitability," the administrator's report stated.

The company then requested further financial assistance from Commonwealth Bank, which was denied on February 29.

Administrators were called in the following day.

Rork Group may have been insolvent from at least June 30, 2023 or earlier, the report stated.

A second meeting is scheduled for April 2, where creditors will vote on what should happen to the Rork Group companies.

Options include ending the administration (only an option where a company is solvent), entering a deed of company arrangement (DOCA) which maximises the chances of the companies continuing, or winding up the companies.

Administrators have recommended creditors should vote to wind up Rork Projects, in circumstances where the group is insolvent and no DOCA has been proposed.

Rork Projects began in 1997, when husband and wife Brian and Angela O'Rourke launched the company as Rork Designs.

It evolved into a national construction, fit-out and refurbishment company and had employed about 100 staff by 2022.

John Paul Janke, host of NITV's The Point current affairs show and a childhood friend of Mr O'Rourke, joined Rork Projects in about 2017 as a co-owner.

He was not listed as a director of the company at the time of the company's administration, however remains a shareholder of Rork Projects (Holdings) Pty Ltd.

Rork Projects was a nationally accredited Indigenous construction company and had worked on several ACT government projects, including upgrades to City Walk and the Gold Creek Senior School expansion.