Major home builder Porter Davis collapses impacting 1700 projects, with Lloyd Group also failing
One of Australia’s biggest home builders has failed leaving 1700 projects at risk, while another major construction firm has also gone under.
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Australia’s thirteenth largest home builder Porter Davis Homes has collapsed suddenly placing 1700 projects in jeopardy across Victoria and Queensland, while another major construction firm has also gone under.
Porter Davis Homes, which employs 470 staff members, appointed liquidators on Friday after failing to find someone to save the firm.
Said Jahani, Matt Byrnes and Cameron Crichton of Grant Thornton Australia were appointed liquidators of 14 companies and revealed work would cease immediately on all projects being conducted by the group of companies in Victoria and Queensland.
Porter Davis Homes (PDH) had over 1500 current homes in progress in Victoria and a further 200 homes in Queensland.
Just hours later another major player in the construction industry, Lloyd Group, also collapsed with 59 projects and 200 staff impacted.
Lloyd's Group, which specialises in building schools and other government infrastructure, had six companies placed into voluntary administration with Deloitte working urgently to try and rescue the firm and find a buyer.
Melbourne’s Bayside City Council revealed a number of projects were impacted by Lloyd’s Group’s demise.
“Council is working with Deloitte to clarify the next steps for our projects under construction which are the Dendy Street Beach Pavilion and Tulip Street Basketball Stadium expansion,” the council said.
The construction firm had projects in both Victoria and NSW, including the Willowdale Sports Pavilion in property giant Stockland’s Willowdale community near Leppington and a major sports facility in Schofields in Sydney.
Deloitte said it was undertaking an urgent assessment of the company’s books to see where costs could be recouped.
“Like others in the construction sector, and despite significant effort, Lloyd Group has been unable to overcome increasingly challenging circumstances over recent months that have eroded project margins, culminating in our appointment today,” Deloitte said.
“We do appreciate that this news will be unsettling and potentially disruptive for employees and project stakeholders, contractors, and suppliers.
“In these early days, we will be undertaking an urgent assessment of the business’s financial position and project-by- project status, and immediately commence communication with project principals and stakeholders.
“We will also immediately commence an accelerated sale process and hold discussions with parties that might be interested in taking on individual projects.”
Meanwhile for Porter Davis Home, there are also 779 signed contracts with customers where building has yet to commence.
Investigations are continuing as to what went wrong and the reasons for the collapse, a spokesperson from Grant Thornton said.
“The extremely challenging environment for residential home building has directly contributed to the PDH Group’s financial position, with rising input costs, supply chain delays, labour shortages, and a drop in demand for new homes in 2023 impacting the group’s liquidity,” they said.
“Notwithstanding the financial support from shareholders and lenders, the group has exhausted options to secure the further funding required to allow Porter Davis to continue to operate viably, and the directors were left with no option but to place the companies into liquidation.”
Porter Davis had been forecasting revenue of $555 million in this financial year, the liquidators added.
Yet, how much debt is outstanding is not yet clear.
A small subsidiary of Porter Davis, a boutique luxury builder called Englehart Homes in Queensland which was acquired by the group in late 2021, will not be impacted and continue to operate, the liquidators said.
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Grant Thornton said it was working urgently to determine if a solution can be found to support customers and some employees, including engaging with key stakeholders and potential interested parties who may be willing to take over the current customer contracts.
The PDH Group board of directors said they regretted the current circumstances and that their efforts to secure a funding solution for the group could not be achieved.
“They further acknowledged the group’s employees for their hard work and commitment to Porter Davis, and were hopeful that a solution could be found to support Porter Davis customers in completing their homes,” the liquidators added.
The construction firm was ranked the 13th largest home builder in Australia with building started on 1734 homes in the 2020/21 financial year, according to Housing Industry Association figures.
The major Victorian builder is the latest casualty in the construction industry that has been hammered by rising material prices, supply chain issues and a shortage of workers.
So far this year, around a dozen builders have collapsed.
Earlier his month, PBS Building, a multimillion-dollar firm which does a mix of commercial and residential projects across Queensland, NSW and the ACT, sent shockwaves through the industry when it collapsed.
From the preliminary investigation, there are more than 1000 secured and unsecured creditors who are owed more than $25 million.
Last month, three prominent building companies collapsed a day apart from each other, with NSW apartment developer EQ Constructions going bust owing up to $50 million, then Perth building company called Hamlen Homes going into administration with $1.4 million reportedly owed to creditors.
The next day Melbourne-based residential builder Hallbury Homes also went into voluntary administration.
Earlier in February, award-winning residential construction company Delco Building Group in Victoria went under owing $780,000 to 50 creditors.
There were also two more companies that failed earlier this month – Queensland-based National Construction Management which went into liquidation this month while Allworks Building Pty Ltd, a NSW company went under too.
NSW based building company Ajit Constructions was also ordered into liquidation by the Supreme Court of NSW after an application by one of its trade creditors Boral Resources NSW.
Originally published as Major home builder Porter Davis collapses impacting 1700 projects, with Lloyd Group also failing
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