Roberts Co Vic projects likely to be broken up to maximise prospects for salvaging partially built sites

Builder Roberts Co’s Victorian arm has shut down its big jobs but administrator McGrathNicol says it can get projects back on track and it will have to break them up for the best result.

The partially built Amazon facility in Craigieburn, Melbourne. Picture: Jake Nowakowski

The administrator of the collapsed Victorian arm of Roberts Co is working to get building sites affected by the insolvency restarted, with new builders interested in taking on the big ticket projects in a possible break-up.

The failure of the Victorian arm of the builder founded by Multiplex scion Andrew Roberts rocked the industry earlier this month, forcing the closure of its sites. But McGrathNicol administrators Matthew Caddy and Jason Ireland are optimistic they can get the affected projects running again.

While the Victorian unit is weighed down by creditors’ claims of about $160m, including uncalled construction bonds, they are working with the developers to get sites working again and ensure that new builders can step in in coming months.

The construction firm’s projects included a Melbourne CBD tower for apartment developer Golden Age and a build-to-rent project in the suburb of Footscray for Oxford that has topped out, as well as a partly built four-level Amazon distribution centre in Melbourne for Asian warehousing giant ESR.

As administrators negotiate with the developers and seek to corral claims from tradies owed up to $70m, they are keen to ensure that the projects can be viable.

While the administrators see Roberts Co’s Victorian arm as unsaleable, because no buyer could take on such large loss-making projects as a whole, they are confident that builders will take on individual projects once they are stabilised, with a split likely.

Mr Caddy said that the biggest issue at the first creditors meeting last week was the revocation of a deed of cross guarantee granted by the Roberts Co parent entity across a series of subsidiaries that was revoked in early February.

Roberts Co still has substantial work on foot in both NSW and Western Australia.

If the revocation was effective, then creditors’ claims on the Victorian entity would be isolated to that company. But there are rights to extend such claims if the Victorian entity goes into liquidation within six months of the revocation being lodged. This could see the revocation become void.

A liquidation could be voted upon at a second meeting of creditors expected to happen at the end of April, but Mr Caddy said the main focus was on working with the impacted developers to restart projects so they were in a position to be shifted across to an alternative builder.

If the idle projects were to kick off again, the convening period may be extended, but the administrators would also look to keep the window open for the possibility of entering into liquidation, opening the way to void the revocation of the deed.

But the business is unlikely to remain whole.

Mr Caddy emphasised that a restart on sites would avoid extensive costs being incurred and said the developers could help do so ahead of a longer-term fix being put in place. If agreements can be reached, they could bring subcontractor payments up to date and allow new works to start.

Mr Ireland said there were about 400 creditors and some of the overall $160m of claims included submissions from developers which assumed that works may not restart. Tradies are owed about $60 to $70m, mainly for work done early this month and in February.

“We’re trying to negotiate standing the projects back up,” Mr Ireland said. The firm has identified creditors for each project and is in talks with the developers to get them paid up to date so they can then return to sites.

Holders of the construction bonds on the projects have not called them in, giving the administrators breathing space, and it won court blessing to pursue deals.

“We’ve had really good conversations with all of those principals,” Mr Ireland said. “We’ve had interest from builders who want to step in.”

Originally published as Roberts Co Vic projects likely to be broken up to maximise prospects for salvaging partially built sites