Potential insolvent trading probe after modular builder's closure

Western Australia's Consumer Protection Commissioner is urging clients of Bella Modular, a modular home builder that ceased operations last week, to lodge formal complaints. The company, based in Perth, informed its customers on August 19 that it could not complete their outstanding projects due to "unforeseen and significant financial difficulties."

A letter sent to clients stated that a new manufacturer had agreed to take over existing contracts. However, details of this new firm were not provided. Bella Modular has already closed its premises in Hopeland, on the southern outskirts of Perth. Commissioner Trish Blake emphasized the need for formal complaints to enable a thorough investigation into the company's dealings.

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I will be asking the team to investigate further and to look into it. I'm also keen to link in with ASIC, because my concern is there may have been some trading whilst insolvent, questions that need to be answered.

Blake expressed concern about potential trading while insolvent and indicated she would liaise with the Australian Securities and Investments Commission (ASIC). "My concern is there may have been some trading whilst insolvent, questions that need to be answered," she told 102.5 ABC Perth. Many customers have paid substantial deposits, some exceeding $100,000, without receiving their homes, which are often months or even years overdue.

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Often with these companies, particularly if you've got a letter that says 'we're in financial hardship, we can't deliver your product', that tells me that something very wrong potentially has gone on in the background, which is why I want to refer things to ASIC as well.

Unlike traditional home builds, modular homes manufactured off-site and transported to client-arranged sites are typically not covered by building indemnity insurance. This means customers may not be protected if the building company goes out of business. However, Blake confirmed that customers still have rights under Australian Consumer Law, specifically regarding the offense of wrongly accepting payment without delivering.

"Particularly… taking payment when they know they don't really have a reasonable chance of delivering," Blake stated. The Commissioner stressed the importance of gathering as many complaints as possible to understand the full scope of the situation and determine potential actions. A Credit Watch report reveals Bella Modular owes the Australian Taxation Office $576,614.68 and is facing three court actions for other outstanding payments totaling over $170,000. It remains unclear if customers will be able to recover their deposits.

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There is an offense for wrongly accepting payment and not delivering. Particularly… taking payment when they know they don't really have a reasonable chance of delivering.