A Perth building company founded by glamour couple Yusuf Khan and his wife Cynthia Lu will be scuttled after a Federal Court registrar ruled in creditors’ favour.
Lawyers for two creditors, and a lawyer for Modco Residential Pty Ltd, on Tuesday morning appeared before national judicial registrar Phillip Allaway, who supported a wind-up order.
Creditors Torquejobs, a Kewdale-based recruitment agency, submitted the wind-up order before the Federal Court in June, about a month before a Corporate Governance Taskforce (CGT) report from ASIC ruled Modco insolvent on July 30.
Torquejobs wasn’t represented on Tuesday; their debts have since been covered, with supporting creditors Rostron Carlyle Rojas Lawyers being substituted as the wind-up applicants.
Another supporting creditor, Flexicommercial, was also involved in Tuesday’s proceedings.
The case went before the Federal Court on Friday, but Modco representatives failed to show, with Mendelawitz Morton Commercial Lawyers senior associate Nathan Draper appearing for the company on Tuesday.
Mr Draper failed in a bid to oppose the substitution of Rostron Carlyle Rojas Lawyers and to have the matter adjourned until after another creditors’ meeting, which was to be held next Monday.
Mr Allaway ultimately ruled Modco to be wound up, meaning its assets are realised, creditors paid out, and the company deregistered.
Rostron Carlyle Rojas Lawyers and Flexicommercial were each awarded costs.
Dollar values weren’t discussed in the proceedings, but it’s understood Torquejobs was owed $28,000.
The creditors are also only three of a list of about 50 owed money by Modco, with the company estimated to owe as much as $5m all up, according to the CGT report lodged with ASIC.
The same report showed Modco only had $534 across four bank accounts by the time it went into administration.
The company, founded as a boutique home builder by Ms Lu and Mr Khan in August 2020, made the bold promise of 20-week builds for all clients.
But cracks began to show when subcontractors alleged they hadn’t been paid, and Modco was finally placed into the hands of Perth-based administrators GTS Advisory on July 24.
In a statement, Modco director Damien Clancy apologised for the company not being able to meet its commitments.
“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 among stakeholders, became an insurmountable challenge,” Mr Clancy said.
“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 among 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.”