Illustration: Matt Golding "I can't tell them that 'we can't pay you because other people have gone bankrupt'." Close to 1000 creditors now claim to be owed up to $30 million by businesses associated with Watersun. It comes after a second collapse that saw Watersun Construction, the commercial arm of the Victorian home builder, recently placed into administration owing a further 190 creditors an estimated $9.94 million. A concrete formwork specialist claims to be owed more than $1.1 million, a Collingwood plumbing company $315,000 and a crane supplier $266,000.

The news has prompted calls for the federal government to use insurance premiums paid by builders to create a fund to help tradespeople and contractors owed large amounts of money by bankrupt builders or developers. Signage for Watersun Construction at a Blackburn site in September. Credit:Google Phil Dwyer, the president of the Builders Collective of Australia, said insolvencies of the scale of the Watersun collapse might force a further 12 to 30 smaller businesses into bankruptcy. "One bankruptcy means a whole string of bankruptcies. This is happening Australia-wide and we have no safety net at all for tradespeople," Mr Dwyer said. "We want a fund that will deliver relief to subcontractors that suffer through these insolvencies."

A spokesman for the Andrews government said it would support a federal review of measures to protect creditors and sub-contractors affected by businesses going into liquidation. But the office of Assistant Industry Minister Craig Laundy argued it was not a federal issue. Unfinished Watersun Homes display houses in Bendigo. Credit:Courtesy of The Bendigo Advertiser Meanwhile, any measure of this nature would be opposed by the Housing Industry Association, which says security of payment laws should allow suppliers to claim owed money before an insolvency takes place. "A levy is going to add another tax to an industry," the association's deputy managing director, Graham Wolfe, said.

"It just snowballs. It is exactly these issues that makes housing more expensive than it needs to be."' WSH Group (formally known as Watersun Homes) was placed into administration late in February, leaving hundreds of unfinished homes and owing former employees and contractors $20 million. Two months later, Watersun Construction was also declared insolvent. Manuel Hanna from administrator Romanis Cant confirmed that Watersun Construction had stopped work on four sites – a childcare centre in Footscray and apartment buildings in Windsor, Blackburn and Brunswick West.

An unfinished Watersun construction site in Windsor. Credit:Joe Armao Mr Hanna said Watersun Construction director, developer Gary Caulfield, phoned into a recent meeting of creditors, telling tradespeople that it was difficult to get contractors to work on Watersun Construction jobs after the collapse of Watersun Homes. "I guess it was a bit of a reputational damage thing," he said. And he said Watersun Homes was also financially supporting Watersun Construction. This grafitti-covered site at 398 Barkly Street, Footscray was also being built by Watersun. Credit:Joe Armao, Fairfax Media.

However Lynda and Bernie Rafferty, owners of B.R. Demolition, said Watersun Construction had not been paying their bills since December - well before the builder's failure became headline news. "We had a cash shortage at that time of a year when that money was due so we really had a struggle," Mr Rafferty said. Bernie Rafferty is owed about $50,000 by Watersun Construction for work completed in Footscray in December. Credit:Simon Schluter Other tradespeople stung in the collapse, including the Halilagics, said when they approached Watersun about outstanding bills they were encouraged to do more work in order to get paid. Mrs Halilagic said insurance to cover trade debts was too expensive, and the couple were now struggling to pay their own suppliers.

Loading "A few of our suppliers have closed our accounts until we pay," Mrs Halilagic said. "One of the companies actually put caveat on our properties because they were worried we might go bankrupt.