Porter Davis collapse: New builders slugged fee to meet customers

A move by Porter Davis’ liquidators could raise tens of millions of dollars to pay off its debt – but it has angered builders. See why and what it means for customers.

Liquidators of failed home builder Porter Davis are charging builders an introduction fee of between $10,000 and $20,000 for each house building contract they offer to take on, News Corp can reveal.

The fee could raise as much as $30m towards the debts of the stricken group – money that would initially be used towards paying off its debt to the Commonwealth Bank.

Liquidators at accounting firm Grant Thorntorn are due to announce a panel of builders who will take on some of Porter Davis’s 1700 building contracts by the end of the week.

News Corp understands the introduction fee has angered builders who are tendering for the work in an industry that has been hit by double-digit increases in the cost of building materials such as wood and concrete over the past year.

There is also no guarantee that the builder who pays a fee will get the contract, as the decision on whether or not to go ahead rests with the customer.

The extra cost will either be absorbed by the new builder or passed on to the customer, depending on the contract.

Mark Anthony outside his half built Porter Davis house in Mitcham, Melbourne. Picture: Ian Currie

However, John Goddard of Subbies United said that if the contracts were profitable builders should pay for them.

“I don’t like liquidators but I see nothing wrong in recovering money in the forlorn hope that some goes to subcontractors,” he said.

Last Thursday, Grant Thornton emailed builders who had expressed interest in taking on some of the Porter Davis contracts, asking them to provide information including their capacity to complete dwellings and where they operated by 5pm that day.

In the email, obtained by News Corp, Grant Thornton said it had three main aims: helping customers by connecting “new builders to existing customers/homeowners to discuss completion of their home on terms to be agreed between the new builder and the existing PDH customer”, working out the terms under which new builders would be allowed to use existing plans and designs drawn up by Porter Davis, and “ensuring we maximise the return to the estate of the PDH liquidation for the benefit of all creditors”.

An unfinished Porter Davis build in Lara, Victoria. Picture: Mark Wilson

A Grant Thorntorn spokesperson told News Corp that while the liquidators were able to introduce builders to customers, “customers are not obliged to engage one of the builders identified by the liquidators through this process”.

“As has occurred in similar situations, some builders have offered to pay an introduction fee to the liquidators in lieu of the marketing and origination costs that all builders typically incur in identifying and securing new customers.”

The spokesperson declined to comment on the size of the introduction fee but said new builders would get access to the plans and design drawings needed to complete houses for free.

Porter Davis collapsed on March 31, appointing Grant Thornton partners Said Jahani, Matt Byrnes and Cameron Crichton as liquidators.

The company had 1500 houses under construction in Victoria and an additional 200 under construction in Queensland, plus 779 contracts that had been signed where building had not started.

On Tuesday, the liquidators rejected an offer to buy Porter Davis from Melbourne businessman Amit Miglani, who in 2021 narrowly avoided jail after being convicted of misusing his clients’ money while in charge of the now defunct MIG Real Estate.

“While we have no reason to doubt Mr Miglani’s intention, we do not believe this is a credible offer to acquire the Porter Davis Group,” a Grant Thornton spokesperson said.

After this article was published online, a Grant Thornton spokesperson provided additional comment.

“The liquidators have very clearly stated the introduction fee should not be passed on to the customer,“ the spokesperson said.

They said the builder would only pay the fee if the customer agreed to sign a new contract with them.

“Although we are not able to quantify, the fee will generate nowhere near $30m,“ the spokesperson said.

“The introduction fee will go towards payment of employee entitlements in the first instance, and then ordinary unsecured creditors.”