The liquidator of failed home builder Porter Davis has shed light on the bust company’s fate, saying there’s no “holistic” approach to saving the entire group.
Matt Byrnes, the national head of restructuring advisory at Grant Thornton – the company in charge of the collapsed builder’s case – revealed a company-wide takeover is not on the cards.
Rather, he said his team will continue to work on smaller parts of the company to assist customers where possible.
“There won’t be a holistic solution for the whole of the Porter Davis Group,” Mr Byrnes told 3AW Drive host Tom Elliot on Wednesday.
“Certainly we’ve had some success … with the Nostra transaction and we’ve got a couple of other packages … that we’re working on the moment but there won’t be a holistic solution … no.”
Mr Byrnes’ comments come after the liquidators entered an agreement with Nostra Property Group on Monday, which agreed to finish the construction of 126 Porter Davis townhouses started by the company.
Additionally, 169 yet to be developed townhouses will commence construction using Porter Davis designs and 16 employees of the failed company will be offered ongoing employment with Nostra.
Said Jahani, joint and several liquidator from Grant Thornton, said in a statement all parties “worked tirelessly” to come to reach a solution for families suffering “enormous stress” from the collapse.
“All parties worked tirelessly to achieve a positive outcome in an extremely short period of time which will see a number of jobs preserved, disruption minimised for several existing and future projects, and critically up to 375 homes built for families,” he said.
Despite this transaction, Mr Byrnes said there are still “in excess of 1000 homes in the middle where Porter Davis can’t complete the build”.
Consequently, customers who have fallen under this banner have since been provided with a shortlist of builders who are “willing and able” to take over the construction of their homes.
“The decision to proceed from here will be one for the customers, so they have to agree, they have to engage with the builder and sign up if they wish,” he said.
Mr Byrnes warned this option could come with further costs as the liquidator can’t guarantee whether a new builder would be willing to complete the job for the same price as quoted by Porter Davis.
“In some cases … the pricing will be very similar to what Porter Davis had agreed to with the customer, but in many cases, this won’t be the case,” he said.
“So we certainly expect there will be a higher price for some customers to pay to complete their build.”
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There’s also bad news for customers who provided a deposit to the builder, with Mr Byrnes confirming allegations they may not receive their money back.
“Unfortunately for those customers who paid a deposit, they were paid to Porter Davis and they were used by Porter Davis as part of its day-to-day operations,” he said.
“So those moneys on appointment – when we were appointed – were not there and so we won’t be able to refund those customers unfortunately who are in that situation.”
It’s unclear how many customers will be impacted by this, with Grant Thornton continuing their investigations, however most of those affected did provide up to a 5 per cent deposit.
Collapsed builder’s multimillion dollar debt
The news that devastated customers won’t get their money back comes as documents filed to the corporate regulator indicate the failed construction company owes the Commonwealth Bank just shy of $33 million.
“We have been advised that the total amount owing to the major secured creditor, the Commonwealth Bank of Australia (CBA), across all entities in the group is $32,939,409,” Grant Thornton said in a document filed with the Australian Securities and Investments Commission (ASIC).
“Our investigations are ongoing to determine if these debts are cross-collateralised across the group.”
While deposit-paying customers aren’t as lucky, the CBA will be at the front of the queue when it comes to receiving its money back due to being a secured creditor.
The documents also reveal the Porter Davis Group had a cash deficit of about $533,000 in the bank at the time of its collapse, the Canberra Times reports.
Additionally a Deloitte adviser to the company first contacted Grant Thornton about the company going into liquidation on March 23, a week prior to reports the company was broke.
At the time, 1500 properties were under construction in Victoria and an additional 200 in Queensland, while a further 779 customers had signed contracts with the home developers with those builds yet to start.
An in-depth report into the collapse of Porter Davis by the liquidator is expected to be handed down to the regulator and creditors by June 30.
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