Debts of PBS Building climb above $60m as administrators are granted extension of time

Debts of collapsed construction group PBS Building have climbed sharply, again, as administrators are granted a special court exemption. How much PBS owes:

Debts of collapsed construction giant PBS have soared again as creditors of the national group continue to come forward with claims.

Adminstrators have lifted their estimate of what is owed by the five failed PBS companies to more than $60m after earlier saying it could be around $40m.

Initial expectations, based on information provided by the directors, estimated debts of $25m.

The eye-watering estimate comes as the Federal Court granted administrators Jonathon Colbran, Richard Stone and Mitchell Herrett of RSM Australia Partners until June 30 to complete their investigations.

The builder - with companies based in Canberra plus offices in Sydney and Brisbane - stopped work and locked up its sites on March 5, and went into administration on March 7.

The group had 80 projects under way and employed 180 staff. Projects span Hervey Bay to Sydney with sites on the Sunshine Coast, Gold Coast and in the ACT.

In handing down his judgement on Tuesday, the Justice John Halley described the extension as “not unduly lengthy’’ and “proportionate to the complexities of the PBS Companies’’.

“I am satisfied that the Administrators are confronted with relatively large and complex administrations and they need further time to pursue the key tasks summarised … in order to assess the financial position of the PBS Companies and provide creditors with sufficient information to make an informed decision at the second creditor’s meeting,’’ he said.

Mr Colbran said the ddministrators now have up until June 30 this year to lodge the final creditor’s report and up to July 7 to hold the second creditor’s meeting.

The Curl development at Bokarina on the Sunshine Coast, a project by PBS which announced it was entering voluntary administration .

“We are currently advising creditors of the Court’s ruling and the amended timelines for the delivery of our report and the second creditor’s meeting, noting that if the Administrators are able to deliver the final report earlier, we will,” he said.

Mr Colbran said extending the timeline to resolve the future of the PBS Building companies was in the best interest of creditors.

“We understand that all stakeholders want to see the future of these companies and the outcomes for creditors resolved as quickly as possible so that everyone has a clear path to move forward,’’ he said.

“However, we cannot sacrifice the potential financial return for creditors for a speedier resolution. That’s why we sought the extension of the convening period.

“We are continuing to work around the clock to unpick the highly complex and detailed contractual, legal, insurance, operational and legislative issues associated with investigating the operations of five different companies engaged in multi-million-dollar contracts across 82 projects in three different states and territories.”

RSM partner Jonathon Colbran. Picture: Supplied by RSM

Justice Halley also ruled in favour of the Administrators’ request to maintain the existing PBS Building bank account structure that was in place at the time of their appointment, recognising that it “will streamline the administrations and create efficiencies’’.

Mr Colbran said there was one centralised treasury account for all entities.

Administrators told the court the number of claims lodged by creditors covering the ACT, NSW and Queensland had now reached more than 450, but there was reason to believe there may be some duplication across claims, for example between principals and subcontractors.

“This number may change still as claims are assessed and verified over the course of the administration,’’ he said.

“The additional claims, combined with further investigations by the administrators, have lifted the current estimated value of creditor claims to more than $60 million across all five PBS companies.

“However, the final figure will not be known until the Administrators complete their investigations and detail their findings in the creditor’s report. A significant number of creditors have, for now, lodged claims that are preliminary estimates.’’

Unusual delay in PBS Building administration

March 23, 2023: Directors of collapsed national construction group PBS Building have been given an extra 13 days to cough up the names of their creditors and how much they’re owed to administrators.

They have also been given the extra time to provide other key details about the state of the failed companies to administrators.

Directors are required to provide administrators with a Report on Company Activities and Property (ROCAP) within five business days of going into administration and administrators are required to lodge the report with ASIC within five business days of receiving it.

PBS went into administration on March 7, meaning ROCAPs for the five collapsed PBS companies were due to be given to administrators on March 14.

But PBS has been given 13 extra business days and is now expected to provide the reports by March 31.

“Due to the complexity of the PBS Building administration covering five companies in three different states, the administrators granted, in writing, the PBS company directors an extension of time,” the administrators said in an email.

“The PBS company directors have and continue to assist the administrators with our investigations.”

The Serenity Reserve townhouse project which was under construction by PBS Building.

PBS Building is directed by company founder Ian Carter and CEO Adam Moore, both of Canberra.

While early estimates put the debts owed by the group at $25m, that figure had blown out to $40m within a week of administrators accessing the books.

An extension of time for directors to provide a ROCAP does not happen often, for example, in the $56m Condev collapse, the report was published in four days.

However, delays have happened in more complex administrations, for example in the $250m collapse of Probuild, which had a vast network of group companies, it was 31 business days before the ROCAP was publicly lodged with ASIC.

The administration of PBS Building will be the first test of Queensland’s project trust accounts, which are required on State Government projects with a value of $1m or more, and all projects with a project value of $10m or more.

The next phase, requiring contracts of $3m or more to have a project trust account in place, was due to kick in on April 1, but was last week delayed for another two years.

The Shoreline tower construction site at 61 Old Burleigh Rd, Surfers Paradise. Picture Glenn Hampson

Company records have revealed PBS was tied to a $42m collapse exactly a decade ago.

PBS Building was part-way through Marquee Developments’ 19-level Shoreline at Old Burleigh Rd in Surfers Paradise, and the sold-out Serenity Reserve townhouse project at Helensvale.

A statement released by the directors described the administration as an “incredibly difficult decision”. “This has been a gut-wrenching decision that we know will impact many lives and livelihoods,” the statement said.

“However, after months of intense efforts behind the scenes, in the end it was the only responsible course of action available.”

Ian Carter, chairman and founder of PBS Building

The PBS directors’ statement said the company had prided itself on getting the job done “no matter what the challenge”.

“Yet, despite this tenacity and more than 30 years’ industry experience, the unprecedented combination of record material costs, fixed price contracts, labour and material shortages, extreme rain events, floods, bush fires and wars has proved an insurmountable challenge,” they said.

PBS Building’s past and present Queensland projects include the Hervey Bay Wetside Water Education Park, Botanica Residences, Latitude25 RV Lifestyle community, Wheller on the Park stages 3 & 4 and The Melbourne Residences in Brisbane.Its past and present ACT and NSW projects include Goodwin Farrer Aged Care, Macquarie University student accommodation, Cooper Lodge stages 1 & 2, Belconnen Theatre and Felix8 International Hotel (now Citadines Connect).