David Reid Homes Sunshine Coast Southern owner/operators Melissa Brinsdon and Steve Booth before the company went into liquidation.

Chris McCormack

THE building industry has been rocked by the news David Reid Homes' Sunshine Coast franchise has closed.

In a letter to the luxury home builder's suppliers and sub-contractors, David Reid Homes Sunshine Coast Southern director Steve Booth said he had placed the company into liquidation last Thursday.

He said due to several circumstances the company was unable to make any further payments to suppliers and sub-contractors.

The award-winning company did not have any assets that could be used to settle outstanding debts, he said.

It is unclear how much the company owes but it has closed with five homes still under construction.

The franchise joins a growing list of builders, developers and related industries to collapse in recent times, sparking fears the worsening economic climate will result in more firms going to the wall.

Suncoast Building Centre general manager Frank Rae, says the business is owed $23,000 by DRH and predicts the worst is yet to come.

“That (the $23,000) is the biggest we've coped in nine years but it won't be the last, unfortunately,” Mr Rae said.

“They're lining up out there. All the subbies, electricians, plumbers and the like … they're the ones who lose.”

It is understood the demise of the DRH franchise was rapid. Mr Rae said it had an A1 credit rating with his company and a good reputation with sub-contractors and suppliers.

The failure of the Coast franchise follows DRH's Fraser Coast franchise going into voluntary administration last September, owing hundreds of thousands of dollars to a long list of creditors.

At the time, Coast-based DRH Australia said the Sunshine Coast franchise was in no danger of closing.

DRH Australia director Roy Baker said yesterday Mr Booth's franchise agreement - which was more than four years old - was recently terminated and he had been stopped from signing any contracts since last October.

Mr Baker, who said it was unclear whether a liquidator had been appointed yet, blamed Mr Booth's demise on the economic crisis and him not being paid for a major job.

“He had a very large debt outstanding for a very large house and it dragged him under,” Mr Baker said.

Mr Baker said DRH Australia was working with the Building Services Authority and Mr Booth's former clients to ensure the existing contracts were completed.

He said all five homes, valued between $700,000 and $1.5 million, were close to completion.