TOWER WIPEOUT
$300m down drain in dark day for construction industry
INVESTORS and subbies have been dealt a shocking blow as details emerge of the collapse of two construction giants. Tradies already hurt financially by the $37 million failure of the Cullen Group are being chased to pay back $8 million to the liquidator; while about 750 investors in the Ralan Group have lost $277 million in off-the-plan deposits.
MORE than $277 million in off-the-plan buyer deposits are believed to have been spent by collapsed developer
Ralan Group, 750 creditors heard at a meeting in Sydney yesterday.
Buyers who paid deposits between $70,000 and upwards of $100,000 each for apartments in Gold Coast Ruby towers two and three, and for apartments in Sydney, have been told there is little chance they will see their money returned.
About $230 million of the shortfall is for deposits on the Gold Coast Ruby and Sapphire projects.
Administrator Said Jahani of Grant Thornton said creditors should “prepare for a poor outcome”.
“It’s still very early in the process, however current investigations suggest a massive shortfall of $277 million in the trust account from the deposits released on Ralan developments,” he said.
The administrators have requested an extension of time for the voluntary administration period due to the scale of the investigation, with debts likely to top $500 million.
Hundreds of buyers, many who also worked as sales agents for Ralan, staged a spirited protest outside NSW parliament last week, waving placards saying “Ralan cheating” and “Law enforce now”.
The majority had signed onto side agreements with Ralan, which effectively gave the company access to the funds as unsecured loans.
“Ralan has been offering these side agreements for a number of years,” the administrator said.
“Our investigations will look at the action of the director, William O’Dwyer, and whether he breached any of his duties.”
Mr O’Dwyer has not returned the Bulletin’s request for comment.
Meanwhile the Gold Coast builder of the first tower in the $1.4 billion Ruby project “had no
inkling” the developer was on the brink of collapse and was negotiating contracts to build the second and third towers on the Surfers Paradise site.
Hutchinson Builders is owed its full $5.5 million final payment for its work.
Managing director Greg Quinn said the builder, which has local offices in Southport and Coolangatta, had paid all its subcontractors and suppliers and would cop the full $5.5 million shortfall.
“It’s quite a big swipe to our profit for the 2018-19 year,” he said
“After we put so much hard work into the project for 19 months, to not get final payment is really disappointing.
“But Hutchies has a wonderfully strong balance sheet, at circa $40 million, and is debt-free so we are still in a good position.”