Sydney construction firm NPM calls in administrators

A client of NPM, who is owed about $1 million and asked not to be identified, said problems had been brewing for some time, with the company paying subcontractors only in “dribs and drabs”.

“We felt it was going to happen for a while,” the client said.

He said he knew of other businesses owed $2 million to $3 million, and suggested the creditor claims could be high.

“Payments were slow, but we were told a big capital injection was coming, and an investor was going to buy into the company,” the client said.

Alarm bells started flashing, he said, when subcontractors were asked to submit invoices via an external platform rather than directly to NPM.

In a statement, NPM chief executive and founder Daniel Afonso said ongoing market pressures had made NPM’s continued operation “untenable, due to skilled labour shortages, inflationary pressures, interest rate rises and a commercial sector that continues to suffer from flow-on effects of [the] COVID-19 pandemic”.

In August – just two months before its collapse – NPM Group Holdings agreed to pay $534,000 for 372,000 company shares (1.63 per cent of total issued share capital) held by its former chief technology and marketing officer Steve Domingues. Mr Domingues left the company in April.

Profitless boom

The collapse encompasses 10 companies in the NPM Group, including Creo Design Group, NPM Home, NPM (Vic), NPM Projects and NPM Group Holdings.

A first meeting of creditors has been pencilled in for November 2.

“The administration process is in its infancy, and we are working hard to immediately establish the group’s financial position, including identifying assets available for realisation and quantifying creditors’ claims with the assistance of the director and the senior staff of the NPM Group,” joint administrator Mr Beattie said.

“We are conscious of the impact the appointment will have on everyone involved.”

Projects completed by NPM in the past 12 months include a workplace design and fitout for Charter Hall at 8 Mile Plains, Brisbane, office fitouts for GPT at 2 Southbank Boulevard in Melbourne, a $5 million rectification and refurbishment at HomeCo Lismore following flooding, the design and construction of two full-floor workspaces in a Brookfield tower in Brisbane and the construction of office suites and lobby works at Australia Square in Sydney for GPT and Dexus.

Mr Afonso was also a director (until July) and a 25 per cent shareholder in another collapsed commercial construction business, NPM Indigenous, which had been supported with $2 million of funding from NPM since 2020.

NPM Indigenous employed predominantly First Nations peoples and offered a pathway for Indigenous people to get into the construction industry. It collapsed in August following two loss-making years, owing creditors about $4 million.

Issues faced by NPM Indigenous, according to administrator KordaMentha’s report to creditors, included material and labour shortages, increasing costs, and trade coverage stress. There was also a disagreement between shareholders over funding support.

“The relationship between the director and the previous directors deteriorated during this time, which impacted project outcomes and the financial viability of the company,” the report said.

Creditors of NPM Indigenous voted in favour of a deed of company arrangement in September that is expected to deliver 6¢ to 11¢ in the dollar to unsecured creditors.

NPM’s collapse follows Melbourne-based residential builder Dome entering liquidation on Friday after falling short on payment demands to a former director.

The challenges facing construction firms in the profitless building boom were spelt out in the 2023 financial results of major Sydney builder Richard Crookes, which reported a $7 million loss on $1.5 billion of revenue.

Know more? Email larry.schlesinger@afr.com