Great fall of Chinese group
A CHINESE construction giant claims any attempt to force it to pay all debts owing from a collapsed joint venture will likely fail because it has no assets in Australia.
China Railway Construction Group (CRCG) is being sued by Brisbane developer Devcorp in the Federal Court to recover funds it promised to pay if the Chinese company’s Australian venture was liquidated.
The Chinese group partnered with a Queensland building company Rimfire in 2016 as part of an ambitious plan to break into the booming apartment market.
But the venture, CRCGRimfire, was put into administration in 2017 with CRCG, the world’s third-largest construction company, securing a debt repayment agreement.
The venture owes subbies and other creditors about $40 million. Devcorp is owed in the vicinity of $17 million.
One of its jobs was the fivestorey The Park apartment building on Markeri St, Mermaid Beach.
CRCG agreed to pay unsecured creditors including subbies only $8 million, or between 41¢ and 57¢ for every dollar owed. That falls far short of the promise to pay all debts under a deed that it earlier agreed with the Queensland Building and Construction Commission (QBCC) that effectively guaranteed the payment of valid claims up to $1 billion.
In a defence filed with the Federal Court, CRCG said the person who signed the deed did not have the authority to do so on behalf of the company.
CRCG further claims that it had no material assets in Australia, a situation that would make it difficult for a liquidator to recover any money over and above what it has offered to repay.
The collapse of CRCGRimfire left several of Devcorp’s major developments, including the Lume at Kangaroo Point and the Lincoln at Greenslopes, unfinished.
CRCG said that even if liquidators were successful in proceedings in Australia, courts in China “do not recognise and enforce Australian judgments as a matter of course.”
“Attempting to enforce an Australian judgment in proceedings against the fourth respondent (CRCG) carried substantial risk,” the company said in a defence filed with the court. “Any return was, at best, likely to take several years to realise.”
Devcorp managing director Murray Thornton said bringing in new builders to complete the projects following the collapse of CRCGRimfire had been costly, but subbies had been the hardest hit. A hearing into the matter has been set down for April 1.