More than $277m off-plan Gold Coast Ruby buyer deposits spent on company expenses by collapsed Ralan Group

More than 750 creditors at a meeting for collapsed Ruby developer Ralan Group have heard the value of missing off-the-plan buyer’s deposits. The nine-figure amount will floor you

William O'Dwyer, Managing Director, Ralan Group speaks at the sod turning ceremony for Ralan Group's $1 Billion project 'Ruby' at Surfers Paradise, Gold Coast. Picture: Regi Varghese

MORE than $277 million in off-the-plan buyer deposits are believed to have been spent by collapsed developer Ralan Group, 750 creditors have heard at a meeting in Sydney today.

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.

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.

“We are working closely with key stakeholders to identify and preserve value for creditors.”

More than $230 million of the deposit shortfall is for buyers on the Gold Coast projects Ruby and Sapphire.

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.

Ruby’s first tower was launched in November.

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.

“We have received some questions around the legality of the side agreements regarding purchaser’s release of deposits on pre-sale contracts,” the administrator said.

“Ralan has been offering these side agreements for a number of years.

“Our investigations will look at the action of the director, William O’Dwyer, and whether he reached any of his duties.”

The Queensland Department of Fair Trading is investigating whether Ralan broke the law by not holding their deposits in separate trust accounts as required under state law.

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.

Greg Quinn, Managing Director at Hutchinson Builders.

RALAN GROUP IN ADMINISTRATION WITH HALF A BILLION DOLLARS IN DEBT

CONTRACTS CRASHING AS VALUATIONS FALL SHORT

Hutchinson Builders is owed its full $5.5 million final payment for its work for Ralan Group.

Hutchinson managing director Greg Quinn said the builder, which has local offices in Southport and Coolangatta, had paid all its subcontractors and suppliers on the job 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 $340 million, and is debt-free so we are still in a good position.”

Administrators and creditors will consider selling Paradise Resort to recoup some of the debt, but whether a new owner would continue the planned demolition and development or leave the resort operational is uncertain.

Ruby was to have four towers.

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Mr Quinn said the collapse caught them unawares and that no-one in the industry had seen it coming.

“We had no inkling of this occurring, in fact we were negotiating for stages two and three,” he said.

“I was really quite surprised.

“But we’ve moved on, it’s occurred, it’s unfortunate but we can’t dwell on something we can’t control — it would be a different kettle of fish if we weren’t in such a good position.”

Huchinson has plenty on its books to keep it busy — it has six projects under way at Palm Beach, others at Main Beach and Southport and is working on the current stage of The Star’s $3 billion expansion.

“It’s a very strong market,” Mr Quinn said.