Ralan collapse: Creditors to failed development group approve proposal to recover deposits through purchase of more units

A mysterious “Mr X” will bail out a prominent Gold Coast developer whose company went into administration earlier this year owing more than $500 million.

A MYSTERIOUS “Mr X” will bail out a prominent Gold Coast developer whose company went into administration earlier this year owing more than $500 million.

Creditors to William O’Dwyer’s Gold Coast companies – which built the Ruby tower in Surfers Paradise – have voted in favour of his offer to recover deposits through the purchase of more apartments from a mysterious developer known as “Mr X”.

Administrator Grant Thornton said this afternoon Mr O’Dwyer’s DOCA (deed of company arrangement) or offer was approved by 703 votes (representing $93 million in deposits) compared to 570 votes ($60 million) in favour of the liquidation of those companies.

Ruby (Tower One)

The vote related to seven Gold Coast entities while creditors voted to place the other 51 entities into liquidation.

Mr O’Dwyer put forward his DOCA proposal to angry creditors at a meeting earlier this month.

The offer involves a scheme that would allow victims to deduct the deposits owed to them from the purchase price of new units developed by “Mr X”.

William O'Dwyer.

This was opposed by the administrators, including Said Jahani, of Grant Thornton, who said liquidation is the “correct path forward” that would provide the best outcome for all parties.

Mr Jahani said the onus is now on Mr O’Dwyer to reveal the identity of the mystery developer, the location of future development sites and details of the discounts for creditors.

Ralan entered the Gold Coast market in 2015, purchasing the Paradise Resort for $75 million and an adjoining city block on the resort’s southern side for $19 million, for which it earmarked its Sapphire development.

The first tower was completed before the company went into administration.

However, plans for three additional towers following completion of the first Ruby tower were scuppered when Ralan Group’s 58 companies went into administration in July owing more than $500 million to creditors and employees.

Administrators in a report said Ralan failed because of its “unsustainable business model” that relied upon a “partial Ponzi scheme” and ultimately led to its failure.

The Ponzi scheme relates to apartment buyers releasing their deposits to be used by Ralan on the promise of 15 to 20 per cent interest to be paid or deducted from the balance on settlement. These deposits were used to pay for the settlement of other unrelated Ralan developments.

Mr O’Dwyer claimed the failure was because the builder for the second and third Ruby towers in Surfers Paradise had increased its quotes by $96 million and $100 million respectively.

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Gold Coast City Mayor Tom Tate and William O'Dwyer. Picture: Regi Varghese

Due to this, the financier for the second, third and four stages of Ruby withdrew and Ralan did not have enough working capital to meet its liabilities.

He put forward his DOCA proposal to angry creditors at a meeting earlier this month.

The offer involves a scheme that would allow victims to deduct the deposits owed to them from the purchase price of new units developed by “Mr X”.