Collapsed Bensons Property could have been insolvent as far back as July 2023
Famous for its glistening Gold Coast towers, the failed Bensons Property Group might have been insolvent as far back as 2023, says a new report.
Business
Don't miss out on the headlines from Business. Followed categories will be added to My News.
Collapsed developer Bensons Property Group, which failed just after Christmas with 1300 apartments in the pipeline across $1.5bn of property projects, could have shown indications of insolvency as early as July 2023, says a new Korda Mentha report.
The collapse came as Bensons property sales for key projects dried up, debt mushroomed and its cash on hand dwindled to only several hundred thousand dollars.
In a toxic mix of financial calamities costs quickly accelerated too, with costs of goods sold in 2019 for the luxury apartment developer representing 88 per cent of revenues, but by 2024 the number expanded to a crippling 247 per cent of group revenue.
By the eve of its collapse a few days after Christmas, costs as a proportion of revenue skyrocketed to 363 per cent, while the developer also was forced to write down tens of millions of dollars in costs related to its Liberty One apartment project in Melbourne as a result of accelerating pressures, operational and timing delays and its own builder going into administration.
If it can be proved the directors of Bensons, including its multi-millionaire developer founder and winery owner Elias Jreissati, did not act with care and diligence when lurching into possible insolvency it could be a breach of section 180 of the Corporations Act, a report by administrators Korda Mentha has revealed.
However, Bensons directors did seek ‘safe harbour’ protection in 2023 as the spectre of insolvency reared its head, potentially giving them protection from any wrongdoing.
Bensons collapsed two days after Christmas to mark one of the largest property developer failures in decades, with estimated total liabilities and money owed to creditors of $813.24m. Its creditors include builders, tradies, investors in its projects, state government revenue offices and the Jreissati family and businesses owned by the family, such as their winery in Victoria’s Yarra Valley.
Mr Jreissati, an immigrant from Lebanon who built up Bensons from scratch, is a well-known philanthropist, art collector and winery investor who made a name for himself building luxurious and opulent apartment towers.
But, despite Bensons’ glistening apartment towers being built from Melbourne to the Gold Coast, Bensons suffered significant financial losses since 2022 and had a working capital deficiency at each financial year-end between 2020 and 2024.
Its cash position too almost completely disappeared, with cash of $19.9m in 2019 diving to only $700,000 in December 2024 just before its collapse into administration. At the same time, its borrowings expanded from $60.8m in 2019 to $352.6m on the eve of its failure.
The Korda Mentha report — which recommends creditors vote in favour of a deed of company arrangement to save the developer from a painful liquidation — reveals Bensons, whose $1.5bn development pipeline includes a 41-level residential tower in Chevron Island, Queensland, worth $485m, and 740 apartments across suburban Melbourne, collectively valued at $452m on completion, only made a net operating profit in three of the past seven years.
This raised the likelihood of insolvency, which was becoming a real risk by 2023.
The property developer’s directors entered safe harbour in July 2023, which is a form of protection under the Corporations Act which may be invoked by directors who believe their company is insolvent or at risk of insolvency.
“Our preliminary investigations suggest the company (Bensons) exhibited indicators of insolvency, and may have been insolvent, as early as 1 July 2023 and as late as 30 June 2024,” the Korda Mentha report concludes.
“If this is the case, then it may be found that the directors did not act with care and diligence (a breach of Section 180 of the Corporations Act). A liquidator, if appointed, will undertake investigations in this regard. However, … directors maybe be able to rely on the protection of the safe harbour provisions.”
Korda Mentha has also investigated related party transactions between the Jreissati family’s Levantine Hill winery in the Yarra Valley — which is not part of the receivership — and his collapsed property group, but found no evidence of uncommercial or unusual business transactions.
The Levantine Hill winery was used for boutique sales events for wealthy clients and potential apartment purchases, with each Bensons property development having a wine and hospitality budget as gifts of wine were extended to clients and potential clients.
Three years ago Levantine Hill released a limited edition $800 bottle of wine called Optume which, at the time, was the most expensive red wine produced in Victoria and was part of a push by Mr Jreissati to elevate Levantine Hill to a luxury wine producer.
According to the report, Levantine Hill remains a creditor of the collapsed Bensons group with an outstanding invoice for wine stock of $519,760.
Other wine and hospitality businesses owned and controlled by the Jreissati family are also listed as creditors. The receivers report noted, upon investigation, it was concluded these wine and hospitality deals were done on commercial terms.
The 151-page Korda Mentha report shows company revenue of $243.3m in 2019 had shrunk to only $45.1m in 2021, $11.8m in 2023 and that by December 2024, just before the company’s collapse, revenue was just $4.6m.
This saw Bensons’ net operating losses widen from $10.8m in 2019 to $11.8m in 2022 before blowing out to $53.7m in 2024 and exploding to $108.2m in losses by December 2024.
Creditors will meet on February 7 to vote on the DOCA proposal.
More Coverage
Originally published as Collapsed Bensons Property could have been insolvent as far back as July 2023
US tariffs could be a tailwind for ResMed
ResMed’s competitors might be hamstrung by potential tariffs imposed by the US, boss Mick Farrell says, but adds the company, which delivered a strong quarterly, doesn’t need the help.
Burger King Cowin on selling fake meat to the masses
Top players bought in big to the fake meat industry. But, as many companies fail, Burger King’s billionaire boss Jack Cowin remains convinced Australians will want plant-based burgers.