SINGAPORE - Troubled construction company Greatearth is being wound up - a week after its shock closure of five Build-To-Order (BTO) project sites that left around 2,900 buyers facing long delays for their homes.
The move is also likely to leave many sub-contractors in the lurch, with few avenues open to recoup what are substantial losses for some.
The winding-up process was triggered when Mr Goh Eng Hwee, the director of Greatearth Corporation and Greatearth Construction, filed a statutory declaration of the company's inability to continue business.
Three related companies - Greatearth, Greatearth Holding and Universal EC Investments - are also being wound up.
Professional services firm PwC was appointed provisional liquidator on Friday (Sept 3). A creditors meeting will be held on Sept 27.
Greatearth Corporation and Greatearth Construction were the main contractors for the five affected BTO projects, which comprise a total of 2,982 units. The projects are Sky Vista @ Bukit Batok, Senja Heights and Senja Ridges in Bukit Panjang, Marsiling Grove in Woodlands and West Coast Parkview in Clementi.
Work at the sites stopped on Aug 20.
Several sub-contractors are facing heavy losses on the contracting fees owed to them by Greatearth.
Some told The Straits Times that they have been locked out of the sites, and so cannot retrieve valuable building materials such as steel components that have not been paid for.
Insolvency lawyer Lam Zhen Yu from Withers KhattarWong said the liquidators will assess Greatearth's financial status and whether it has assets that can be sold to raise cash for creditors.
"At the end of the liquidation process, which may take up to a few years, the liquidators will distribute any balance funds, after paying the costs of liquidation, to the creditors in order of their priorities," he said.
TSMP Law Corporation co-head of construction and engineering Derek Loh noted that the chance of "any significant recovery" by sub-contractors is small, as they are likely to be ranked as unsecured creditors.
The sub-contractors have few alternatives apart from awaiting the outcome of the liquidation process, he added.
"Secured creditors, mainly the banks and financial institutions, and the employers of Greatearth will have greater priority in receiving payment over the sub-contractors," he added.
Mr Loh noted that when a firm like Greatearth faces financial difficulties, it can seek relief through various approaches such as judicial management or schemes of arrangement, but the firm appeared to not have sought these options.
"In the case of Greatearth, there was probably a realisation that the debts of the company were so overwhelming that it would not be possible to save the company," said Mr Loh.
The Housing Board has told home buyers that the projects would be delayed, although it did not specify for how long.
New contractors will be appointed as soon as possible to complete the work, it said.
The completion dates for these projects had already been pushed back because of manpower and supply disruptions in the construction sector caused by the pandemic.
Greatearth was also the main contractor for two public projects that are now facing possible hold-ups - the Mandai Crematorium and Columbarium and the Gali Batu bus depot.
Greatearth Construction and Greatearth Corporation were both incorporated in 1981.
Greatearth Construction was acquired by United Engineers Limited (UEL) in 1990.
In 2011, UEL spun off its mechanical and electrical engineering, construction and other related businesses and listed them on the Singapore Exchange as UE E&C, which was eventually privatised and delisted in 2015.
UE E&C renamed itself Greatearth and focused on its core business of property development, engineering and construction.
The home-grown company has worked on more than 400 projects, including Mount Elizabeth Hospital and Nanyang Technological University's Lee Kong Chian School of Medicine campuses in Boon Lay and Novena.