Failed contractor hit by slowdown, dispute

A contractor involved in building key infrastructure at Chevron's Gorgon LNG project could have been trading while insolvent up to 14 months before calling in administrators.

Killarnee Civil and Construction Contractors suffered a $22 million financial collapse last month, blamed on contract losses or disputes and an industry slowdown. In a report to creditors, insolvency specialists Ferrier Hodgson said preliminary analysis suggested Killarnee might have been insolvent from as early as June 30, 2013.

At the time, Ferrier said the contractor had significant statutory payments in arrears which were subject to plans.

The administrators also said a deal to sell most of Killarnee's assets and remaining contracts to fellow contractor Central Systems could be struck around today's date.

Killarnee owner Paul Thompson had entered a sales agreement with Central before appointing administrators.

The creditors report said the two companies had been in talks last year about Central taking a stake in Killarnee but did not reach a deal.

The sale deal aside, Ferrier Hodgson advised creditors not to accept a deed of company arrangement proposed by Mr Thompson when they meet next week because it could not confirm a greater return than liquidation.

The administrator recommended an adjournment until December.

Killarnee is a 16-year-old company which has been involved in the construction of massive LNG tanks at Chevron's Gorgon project under a $120 million contract.

Among its debtors, the contractor claims to be owed a combined $4.6 million by clients CB&I and WHBO for work on the Gorgon and TAN Burrup projects in the Pilbara.

It is also embroiled in a contract dispute with Downer EDI in which each side has filed claims of between $4 million and $5.6 million against each other.

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