Probuild employees will be paid first after DOCA scheme accepted

Hundreds of workers caught up in the collapse of construction giant Probuild will get money in their bank accounts in the next few months after creditors agreed on a repayment plan.

Probuild Group collapsed in February with subcontractors and tradesmen walking off the job.

Probuild Group employees who were made redundant will be paid their full entitlements within the next few months after creditors voted to “overwhelmingly” accept a repayment plan recommended by the company’s voluntary administrators.

About 250 workers will be paid $16m through a Deed of Company Arrangement (DOCA) proposed by South African parent company WBHO Construction almost four months after its Australian operations collapsed in one of the biggest construction failures in the country.

Voluntary administrators Deloitte Turnaround & Restructuring team Sal Algeri, Jason Tracy, Matt Donnelly and David Orr recommended the acceptance of the DOCA – which is a binding arrangement between a company and its creditors governing how the company’s affairs will be dealt with – instead of a liquidation process which would have left creditors with less of a return.

“This was a great result for creditors and the culmination of the hard work of all the stakeholders,” Mr Algeri said.

“They voted overwhelming in favour and our intention is that within 10 weeks following the signing of the DOCA we will be making dividend distributions to employees of almost $16m which will cover all of their entitlements.

“So we will close the books on the employees in a few months but for creditors it will be a slower process because of future asset recovery.”

A Deloitte Australia report presented to creditors at a meeting on Thursday showed Probuild has $347.2m in liabilities with smaller creditors to receive between 50c and 71c in the dollar. Larger creditors will receive between 3.9c and 24.6c in the dollar.

More than 2300 creditors — people or entities claiming to be owed money — have lodged claims.

Probuild administrator Sal Algeri.

The Deloitte Turnaround team’s decision to embark on an urgent sale strategy of the group’s businesses and return a number of projects to developers to complete has been vindicated with a reduction of more than $270m – from the initial $617.4m in creditors’ claims.

Mr Tracy said the purchase by Roberts Co of six Probuild sites, within six weeks of the collapse, was a crucial part of the successful process.

“If we had not acted at that speed we would not have had a business to sell because the builders and employees would have left,” he said.

On February 23, 18 WBHO Australia Group companies went into voluntary administration after its South African parent pulled the pin on further financial help.

When the Australian arm collapsed it was well advanced on a national pipeline of projects worth $5bn across Australia.

The creditors meeting involved the Probuild Group which consists of 16 companies including Probuild and Monaco Hickey and 450 employees under voluntary administration.

There were 250 employees who were made redundant, 150 went with Roberts Co and 50 to other developers and builders.

The creditor’s report said Probuild Group’s collapse could ultimately be attributed to the 443 Queen St apartment project in Brisbane and The Western Ringroad Upgrade project in Melbourne.

Other reason cited were the cumulative impact of smaller losses on other projects; the withdrawal of shareholder support; and increasing costs to complete contracts due to Covid-19 effects on margins and the resultant project delays.

Originally published as Probuild employees will be paid first after DOCA scheme accepted