Property magnates the Chow Brothers, John and Michael Chow, whose assets include commercial property, hotels and strip clubs, have confirmed the purchase of Stonewood Homes today, Fairfax Media reports.
The deal was completed with finance specialist Clint Webber and the brothers said it covers both the national franchise rights and the Christchurch franchisee.
"Stonewood complements our office, retail, accommodation, and car park property portfolio," John Chow said.
As New Zealand's third largest house builder, Stonewood was placed in receivership on February 22, with 110 uncompleted homes and with debts to unsecured creditors, including hundreds of subcontracting firms, of around $15 million,
"This purchase signals our clear intention to repair recent damage to the brand and to re-establish the Stonewood brand nationally on a very firm footing," John Chow said.
The trio met with the 44 remaining employees of the company and offered them "new contracts on similar terms", they said in a statement.
"While we still have quite a process to work through with the receivers, our next step will be to engage urgently with customers with uncompleted homes. It's vital we provide certainty for customers who have been affected. We have a management team of eleven here in Christchurch to seal the deal but we ask for tolerance from affected parties" Webber said.
In the wake of the Stonewood Homes Christchurch collapse a specialist trade insurer has urged all building subcontractors to take out insurance to protect themselves from the cost of such an event.
Builtin New Zealand, a boutique insurance provider that specialises in cover for builders and tradespeople, introduced their Subcontractors
Payment Guarantee in the wake of the collapse of Hartner Construction in 2001. In February 2013 Mainzeal Construction collapsed, leaving subcontractors out of pocket to the tune of around $70m.
Builtin’s Marketing Manager, Ben Rickard, says these large, high profile collapses are the tip of the iceberg and that dozens of firms go bust every year leaving their subcontractors unpaid for work done. Two other regional Stonewood franchises are currently in liquidation, along with at least a dozen other building companies nationwide.
“It may seem counterintuitive but there’s as much risk of a building company failing during the boom times as there is during a downturn, and Stonewood is a prime example.”
Customers are given a very competitive fixed price, but if the project is delayed, as they can often be when tradespeople are in demand, costs continue to rise to the point that the builder isn’t making any money on that contract.
“This is just one example of the ways building firms can get into trouble, sometimes through no fault of their own. But irrespective of the cause, it’s their customers and subcontractors who end up suffering.”