Multiple developments, homes in jeopardy as PBS Building goes into administration

A day after their website shut down and build sites were abandoned, a massive building company with a foothold across three states has collapsed.

Less than 24 hours after a major building company closed up its website and abandoned construction sites, it has called in administrators.

On Tuesday afternoon, PBS Building, a multimillion-dollar firm which does a mix of commercial and residential projects across Queensland, NSW and the ACT, officially collapsed.

Jonathon Colbran, Richard Stone & Mitchell Herrett from insolvency firm RSM Australia Partners have been appointed as joint administrators.

They have been appointed across all of PBS Building’s entities – including its NSW, Queensland and ACT companies, as well as two other parent companies.

The collapse has left 180 staff across all three states without a job, while 80 residential and commercial projects are also up in the air.

From the preliminary investigation, there are more than 1000 secured and unsecured creditors who are owed more than $25 million.

For several days the PBS Building website was showing an error message but just after 2pm on Tuesday the website switched to displaying its status as being in voluntary administration.

All that appears on the PBS website.

In a statement, PBS Building said its board of directors and founder Ian Carter had “made the incredibly difficult decision” to hand the company over to insolvency experts.

“This has been a gut-wrenching decision that we know will impact many lives and livelihoods. However, after months of intense efforts behind the scenes, in the end it was the only responsible course of action available.”

The company claimed it had not abandoned building sites but had instead “secured” them “with the express purpose of not incurring any further expenses”.

Its failure was blamed on the perfect storm of factors including rising costs of materials, fixed price contracts, labour and material shortages and extreme weather events.

This “proved an insurmountable challenge”.

“Ensuring our employees received their entitlements in full, has been a priority for the Board,” PBS Building added.

They said that as of March 6, the firm’s last day in operation, all employee entitlements have been paid out “in full”.

The building company had been in operation for 33 years before its collapse.

Jonathon Colbran said in a statement: “All work on these sites ceased immediately prior to the appointment of the Administrators and it is not clear at this stage whether works will recommence.

“If works do not recommence, the operations of the PBS construction companies will progressively be shut down and sites will be handed over to customers.”

Both the administrators and the builder warned that they would not be the last building company to come undone amid the current tough market conditions.

”We won’t be the last construction group to buckle under the weight of a broken industry and way of doing business that needs urgent reform,” PBS Building warned.

The defunct website of PBS Building.

It comes as earlier on Tuesday news.com.au reported on a Queensland family getting nervous about what the builder’s sudden vanishing act would mean for their $640,000 half-built town house.

Since Monday multiple building sites have been shuttered and tradesmen have been spotted collecting their tools, while the company’s website and phone lines are down.

Now Michael*, who preferred not to use his last name, is concerned about what it means for the prospects of his three-bedroom, two-bathroom townhouse ever being built.

“I’ve literally been watching the development every day,” Michael, 44, told news.com.au.
The dad-of-two lives across from the development, known as the Curl, in Bokarina Beach along the Sunshine Coast.

But on Saturday, he grew alarmed when security guards showed up on site. On Monday, he witnessed tradies visiting the construction zone to collect their tools.

“I was going to talk to some of the workers yesterday when they were packing up but they looked angry,” he said.

“I am guessing they are concerned about not getting paid which is fair enough.”

A photo Michael took of the abandoned site this morning, hours before it collapsed.

Michael and his wife signed a land and build package with developer Stockland in mid-2020 and forked out a $38,000 deposit for building works.

At first, local construction company BA Murphy was contracted to build the townhouses and apartments slated for the Curl development, before the company collapsed into liquidation.

PBS Building was then brought onto the project but now they too have collapsed.

“Hopefully third time lucky for us,” Michael quipped.

Now the dad is terrified of the developer evoking a sunset clause, which can happen when the development takes longer than expected, with a termination clause in the contract.

With two builders already involved in the project, it’s possible build costs could blow out and the development could be delayed.

“I don’t know what’s going to happen, with that sunset clause,” he said. “That sunset clause is going to pass and the capital growth on these properties has gone up a lot.”

It could mean the developer could refund everyone their money, but by then home prices have gone up so much the young family are priced out of the market.

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The email Michael received on Friday.

PBS Building’s problems seem to have come out of the blue, with Stockland emailing customers on Friday over the Curl with positive news.

“Construction is back in full swing for the year, with our building partner (PBS Building) working hard to bring your future home to life,” part of the email read.

Since the news broke of PBS Building being on shaky ground on Monday, Michael says he has heard “radio silence” from his developer.

“The security guards are not saying much and Stockland haven’t given us an update,” he said.

The project is meant to be completed in the first half of next year.

Stockland did not answer news.com.au’s questions about sunset clauses but said all PBS building sites had been “secured”.

The spokesperson added: “We will work with all relevant stakeholders as further details of PBS Building’s position are made available.”

Just an hour after the spokesperson spoke to news.com.au, PBS filed for administration.

When news.com.au called PBS Building during business hours on Monday, all calls went through to a voice message system.

Meanwhile, news.com.au understands a plumber in Canberra could be owed as much as $250,000 from PBS Building.

Several mega projects contracted to PBS elsewhere in Queensland and in the ACT are now in jeapoardy, including a massive $53 million development known as the Melrose project in the Canberra suburb of Woden, as well as a 19-storey development called Shoreline, in Surfers Paradise, and a townhouse project in Helensvale.

Incoming Construction, Forestry, Maritime, Mining and Energy Union National Secretary Zach Smith said on Tuesday morning PBS Building was “teetering on the edge of ruin”.

The Serenity Reserve townhouse project which was under construction by PBS Building has reportedly been abandoned.

ASIC documents obtained by news.com.au show that in October last year, when PBS Building lodged its latest annual report, it was treading a very fine line of staying profitable.

According to the filing, PBS Building had $27.5 million worth of assets as at the end of the last financial year.

Meanwhile, they had $23.8 million in liabilities.

The embattled firm has lost money two years in a row but the amount got considerably bigger in 2022.

Last financial year ending June 30, PBS racked up losses totalling $4.3 million.

The year before, it had a comprehensive loss of $558,000.

PBS Building had a revenue of $90.8 million last year.

A photo of the Curl development under construction.

News.com.au also obtained a report from private company CreditorWatch, which showed that PBS Building had defaulted on a $33,000 loan.

Lindsey Civil, an electricity supplier near the Sydney suburb of Campbelltown, lodged the record of the default in April last year, with the money due in March.

It’s understood PBS has since paid back the debt.

CreditorWatch classified PBS as “high” risk over the late payment.

The firm has an average of $173,000 in overdue payments, compared to the industry average of $16,000.

On average, PBS is taking 34 days to pay debts, alarmingly well above the industry average of just six days.

It also said the firm deals with around 25 lines of trade.

It comes as the entire building industry is in crisis because of supply chain disruptions, skilled labour shortages, skyrocketing costs of materials and logistics, locked-in price contracts and extreme weather events.

So far this year, around a dozen builders have collapsed.

*Last name withheld over privacy concerns

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Originally published as Multiple developments, homes in jeopardy as PBS Building goes into administration