Probuild’s collapse to still cost millions
HUNDREDS of creditors will be millions of dollars out of pocket from the collapse of construction giant Probuild Group despite the administrators’ successful business sales strategy which has slashed claims by $270m and saved jobs.
Deloitte Australia has backed a proposal by Probuild’s South Africa parent company to pool its commitments, ensuring creditors receive a portion of the almost $350m in current total liabilities.
In a report ahead of a June 30 creditors meeting, Deloitte Australia said that the Deed
of Company Arrangement (DOCA) proposed by WBHO Construction SA would result in a greater return to creditors than if the group’s companies went into liquidation and were wound up.
“We estimate that the DOCA will provide an average return to small creditors (under $25,000) of between 71 per cent and 50 per cent and to other creditors between 24.6 per cent and 3.9 per cent under a high scenario and a low scenario respectively,” Deloitte said in the report.
The DOCA – which is a binding arrangement between a company and its creditors governing how the company’s affairs will be dealt with – would also see employee entitlements be paid in full and earlier than in a liquidation scenario and a distribution to ordinary unsecured creditors of an estimated $9.4m to $45.1m, subject to future recoveries.
On February 23, 18 WBHO Australia Group companies went into voluntary administration after its South African parent Wilson Bayly HolmesOvcon pulled the pin on further financial help.
Deloitte Turnaround & Restructuring team Sal Algeri, Jason Tracy, Matt Donnelly and David Orr embarked on an urgent sale strategy of the group’s businesses and returned a number of projects to developers to complete.
The report said the sale of five Probuild Melbourne projects to Roberts Co and WBHO Infrastructure to SRG Global Civil Pty Ltd resulted in a significant reduction in overall creditor claims by $270m to $347.2m, from $617.4m at the date of appointment. If the sales had not gone through creditor claims overall would been well in excess of $1bn.
Mr Algeri said the creditors report was an important milestone in what has been as highly complex and high profile process.
“In just over four months, our strategy of continuing to trade, recommence certain key projects, and pursuing an accelerated sale of the business, has assured the completion of six key projects, continuity of employment for more nearly 200 people, continuity of business for subcontractors, and a significant reduction in overall creditor claims,” he said.
“Without this outcome, the potential failure of subcontractors, and the associated impacts on business owners, their employees and the Victorian economy, and the potential flow-on industry impacts, also can’t be underestimated.”
More than 2300 creditors – people or entities claiming to be owed money – have lodged claims and on June 30 will be given the choice of accepting the DOCA or putting the companies into liquidation.