Home buyers and tradies burnt by the collapse of Bob Day’s construction empire are weighing up whether to go after up to $2 million in loans and donations made to the former senator’s party even as his companies were teetering on collapse.
A successful action could bankrupt the Family First party along with Mr Day, who has already quit Parliament to face personal ruin including the loss of his family home and other assets.
Australian Electoral Commission disclosure returns show Mr Day contributed almost $2 million to the minor party between 2009-10 and 2014-15.
That includes $484,000 in donations in 2013-14 and $73,200 in 2014-15, well after his Home Australia business started faltering.
While nearly $1.5 million of that money was bundled together as a loan to the party, electoral records show he forgave that debt entirely just last month, long after it became clear that his company was unable to pay its debts.
Mr Day’s resignation from the Senate on Tuesday touched off a cascading series of events, including a government reference to the High Court to decide the South Australian’s eligibility to stand for election in the first place.
That ruling turns on the complex arrangements surrounding the then senator’s office accommodation in Adelaide in a building he first owned, and then sold to an associate, after providing that associate with funding to buy it.
The case, which the Turnbull government believes will not be resolved by the High Court before February, means the Senate will be one compliant number down for the remainder of 2016, throwing its legislative program into greater doubt.
Prime Minister Malcolm Turnbull has hinted that his union-busting ABCC and Registered Organisations bills – the trigger for the early election on July 2 – will not be put forward unless the government is sure it has the numbers.
“We will present them to the Senate when we believe there is a majority that will support it and on terms that we will accept, and that we will continue talking to the cross bench towards that end,” he said.
Labor later warned the Senate could again run out of work for the second time this year, but the government will push ahead next week with what Mr Turnbull called “time-sensitive” bills on the proposed same-sex marriage plebiscite, and appropriation bills needed to pay pensions.
Distressed creditors of Mr Day’s collapsed companies, who met with liquidators McGrath Nicol for the first time on Thursday, will also explore whether the classification of the party donations as loans was counted on the asset side of the books of Mr Day’s companies.
That could attract the attention of the corporate regulator, the Australian Securities and Investments Commission, amid suspicions the group might have padded its balance sheet via a party loan it was not intending to recall, allowing it either to borrow more, thus worsening its debt position, or perhaps trade while insolvent.
Fairfax Media asked Mr Day to explain why the loan of such magnitude was forgiven as his company was on the brink of collapse but in a text message he said only: “It was for my own election campaigns”.
At a meeting of frustrated creditors in Sydney for Mr Day’s NSW business, Huxley Homes, liquidators said there was almost “no prospect of a return” on their investment. Debts to unsecured creditors from Huxley Homes exceed $3.4 million but the company’s real asset value is less than the price of a single house at just $200,000.
McGrath Nicol’s Barry Kogan was asked by homeowner Samantha Baker if it would investigate the loans and donations to Family First.
“Only to the extent that we think the money can be recovered,” Mr Kogan responded. “Our focus is primarily on a return to creditors.”
The liquidator said it would examine breaches of director’s duties as part of their investigation. Mr Kogan said they would also investigate whether the company was trading while insolvent, and engaged in unfair preferences and uncommercial transactions.
Of the 94 homes under construction in NSW, 28 customers have no insurance coverage and will get nothing.
“Homes were being sold to customers below the price at what they actually cost to be built,” Mr Kogan said.
Huxley Homes is just one of eight companies under Mr Day’s Home Australia umbrella – which is almost $38 million in debt – to hold liquidation briefings on Thursday. Simultaneous meetings also occurred before homeowners, contractors and creditors in Melbourne and Adelaide.
Up to 581 customers have been affected by the collapse of the group. The only secured creditor to Mr Day’s failed company is the National Australia Bank.
Mother-of-two Kerry Mcrae tore down Huxley Homes banners out the front of her half-finished Harrington House last week. On Thursday, she lashed out at Mr Day’s management of the company.
“It’s unforgivable what he has done,” she said.
Bricklayer Ghaffor Rezaie claimed Mr Day called him personally weeks ago to promise he would pay the thousands of dollars he owed.
“They owe me $38,000. I have rent and eight staff to pay, now he has just gone silent,” the 25-year-old said. “It’s rubbish, everyone is frustrated.”
Family First was paid nearly $223,000 in public funding following the July 2 election. It is unclear whether the party may have to repay the money should Mr Day’s election be proven invalid.