Collapsed developer Ralan Group used Ruby Gold Coast off-plan purchase deposits to fund ongoing expenses: administrators

Buyers in future towers at the Ruby development have learned their deposits have likely already been spent by the failed Ralan Group. Here’s how it happened.

Drone aerial images of Ruby tower 1 of the Ruby Collection.

BUYERS in four future towers at the Ruby development site have been told deposits from their off-the-plan buys have likely already been spent by the failed Ralan Group.

The 58 companies of developer William O’Dwyer’s Ralan Group went into administration late on Tuesday, throwing the $1.4 billion pipeline of Gold Coast development and hundreds of existing Gold Coast jobs into doubt.

Initial estimates from administrators Grant Thornton reveal Ralan companies owe half a billion dollars in debt to a range of creditors.

In a letter to off-the-plan purchasers in Ruby towers two, three and four, as well as neighbouring Sapphire and a Sydney project Orchid, the administrators revealed many of them had signed over their deposits to two other Ralan companies.

The letter said “the majority of purchasers” had entered side agreements with Ralan effectively granting Ralan use of the funds as unsecured loans.

“At this initial stage, we believe that the majority, if not all, of the deposits released to

(the Ralan company) have been used to fund the expenses of the Group including payment of interest on unsecured loans,” the letter said.

“The Administrators will be undertaking an investigation into the Group’s financial position to establish how these funds have been used and whether any recoveries can be made in the future that will be available to pay you back.”

CONTRACTS CRASHING AS VALUATIONS FALL SHORT

Exterior view of the Ruby Collection in Surfers Paradise. Picture: Jerad Williams

SUBSCRIBE TO THE BULLETIN FOR $1 A WEEK FOR THE FIRST 12 WEEKS

The group was one tower into its ambitious four-tower Ruby hotel and residential project and its neighbouring Sapphire project, at Surfers Paradise and also owns the Paradise Resort next door.

Gold Coast staff are employed at the Ruby hotel and across Paradise Resort in its retail store, entertainment program, kid’s club, cafe, bar and in its housekeeping and maintenance operations.

Sydney-based developer Ralan Group has collapsed, potentially leaving hundreds of people out of work. Exterior view of the Paradise Resort in Surfers Paradise. Picture: Jerad Williams

Staff of the Surfers Paradise operations were emailed Tuesday night with news of the collapse, but were told it was “business as usual” and warned against speaking to the media.

The hotel and resort are both still taking bookings, and administrators say existing bookings remain valid.

Mr O’Dwyer said in November the fast-tracked $1.4 billion Ruby Collection, featuring towers from 32 to 60 storeys, would spark 5000 jobs for the city.

However, even then there were reports sales in the first tower were being denied finance, with valuations coming in up to 30 per cent lower than expected.