The Bay Building and Morgan Building group collapsed in early 2006 owing more than $35 million, including $22.8 million to an estimated 500 unsecured creditors and investors.

It had been building residential and commercial properties in the Hunter and on the Central Coast.

ASIC executive director of enforcement Jan Redfern said the penalties were appropriate but Hunter people touched by the Bay collapse said yesterday the penalties were too light.

Gregg Ross Morgan, of Leneghan, was disqualified for five years and Darren Boyd Van Aardt, of Brightwaters, was disqualified for three years.

Phillip Norman Rankin, of Redhead, and David Hastings Warne, of Pymble, were disqualified for 18 months.
Another director, Gerard Connaughton, was not penalised after the liquidator of five of the six companies, Brisbane-based Jonathan McLeod, cleared him.
Ms Redfern said the four men were "responsible for the failure and financial deficiencies of the companies and engaged in multiple forms of misconduct".
She said the directors made or agreed to make "uncommercial and irrecoverable loans to related entities" totalling more than $7.5 million.
They also allowed the companies to breach statutory requirements in tax and workers' compensation and Mr Morgan and Mr Van Aardt failed to prevent one company, Bay Building Investments, from incurring more than $570,000 in debts while insolvent.
In May 2006, Mr McLeod said he believed the Bay companies had traded while insolvent for at least six months, opening the directors to possible jail terms and fines of $1 million or more.
Federal MP Joel Fitzgibbon told parliament the same month that ASIC should "use all the power available to them to lock these guys up".
Ms Redfern said yesterday that ASIC had obtained federal funds for Mr McLeod and James Shaw, of Ferrier Hodgson Newcastle, to carry out "a proper investigation" of the Bay group but said the resultant reports would not be made public.
She said ASIC decided against preparing a brief for the Director of Public Prosecutions, which would have then decided whether to seek criminal convictions.
She said five years' disqualification was the maximum penalty available under civil law and disqualification as a company director was, of itself, a serious penalty.
Saddington Building Supplies spokesman David Saddington said his company was owed only about $20,000 from the collapse but others who could not afford it lost huge amounts of money.
"These disqualifications are a slap on the wrist and nothing more," Mr Saddington said.
As a member of the liquidators' creditors committees formed when the companies went under in 2006, Mr Saddington said something needed to be done to tilt the legal playing field in favour of creditors and investors when companies collapse.
MBA Hunter regional manager Len Blakeney said his organisation had run workshops with creditors of the Bay group and it looked on the surface as though the penalties were too light.
"We've been pushing for a Supreme Court public examination of the directors' affairs, and that would answer those sort of questions," Mr Blakeney said.
University of Newcastle Legal Centre director Shaun McCarthy declined to comment yesterday on ASIC's decision but said the centre was still considering being involved in a court examination of the Bay and Morgan directors.
The Herald was unable to contact the Bay directors. The six companies involved are Bay Building Developments, Morgan Building and Property Maintenance, Bay Building Investments, Bay Constructions (Aust), Debay Holdings and Victory Parade.