Company’s Financial Dealings Under Scrutiny

Melbourne-based construction firm Area Projects Pty Ltd has collapsed, leaving a trail of debts amounting to $2.3 million, with questions raised over $2.5 million in unexplained transfers, according to news.com.au. The company’s sole director, Brett Mcgauchie, is now facing intense scrutiny from the liquidator, who has uncovered a series of questionable financial transactions in the months leading up to the company’s failure.

Appointed liquidator John Morgan of BCR Advisory has been investigating the company’s financial records and found that Area Projects regularly transferred funds out of the business, potentially to accounts controlled by Mcgauchie. Financial statements indicate that a director’s loan of $595,843 was recorded at the time of collapse, but the company’s records were not accurately maintained, making it difficult to verify the full extent of the transactions.

Millions Transferred Before Collapse

The liquidator’s report reveals a pattern of financial activity where customer deposits were immediately moved out of the company, totaling $2.545 million over the last 18 months before Area Projects shut down. These withdrawals lacked detailed descriptions and were allegedly directed to bank accounts “presumably under the control” of Mcgauchie, according to news.com.au.

“Further investigations are warranted to establish the nature of these payments and whether the director benefited from them,” the report states. Due to the limited financial information available, the liquidator has yet to determine whether any amount was directly paid for Mcgauchie’s personal benefit.

Sale of Assets and Missing Funds

Before the liquidation process began, $21,000 worth of company assets was sold to an unrelated company. However, the liquidator has been unable to trace where these funds ended up, as they were later transferred out of the company’s bank account without any clear records, as reported by news.com.au.

“Sale proceeds were deposited into the company’s bank account,” the liquidator noted. “I have traced the funds which appear to have been transferred into another account without a detailed description.”

Property Transfer Under Investigation

Adding to the controversy, Mcgauchie no longer owns any property, but the liquidator’s investigation suggests he may have transferred ownership of a Camberwell property valued at approximately $1.7 million. Records indicate the home was transferred for $0 in September 2023, just months before Area Projects collapsed, according to news.com.au.

“It is possible that this property may have been the director’s property until 22 September 2023. My investigation into this property dealing is ongoing,” the report states.

ATO Among the Largest Creditors

Area Projects owes a total of $2.3 million, with unsecured creditors accounting for $1.477 million. Among the largest creditors is the Australian Taxation Office (ATO), which is owed $715,609.

The liquidator has also determined that Area Projects had been trading while insolvent for at least three and a half years, stating the business was unsustainable since June 2020. Mcgauchie may face an insolvent trading claim of up to $742,000.

Difficult Investigation and Homeowners Left in Limbo

Liquidator John Morgan has described the investigation as difficult, citing challenges in obtaining cooperation from Mcgauchie. “It’s easy to bat us off. He keeps giving us answers, but we don’t like the answers,” he told news.com.au. He vowed that “the investigation is far from over.”

Meanwhile, homeowners who had signed contracts with Area Projects are still engaged in court battles to recoup their losses. Some claim to be hundreds of thousands of dollars out of pocket, with little hope of recovering their money.

“He walked away into the sunset,” one anonymous homeowner told news.com.au. “You can see all the carnage. It’s horrendous.”

Before the company’s website was taken down, Mcgauchie had described himself as a ‘passionate family man’ and a ‘frustrated Richmond supporter’, stating that he “tries hard to make his part of the project as stress-free as possible.” However, with Area Projects now collapsed and millions in funds unaccounted for, the company’s former clients and creditors have been left to deal with the fallout.