Australian developer Caydon collapsed owing more than $200m

The building giant has left a trail of creditors owed money including 23 employees, a real estate agency, law firm and even Google.

A collapsed development giant, which went under with around 130 unsold apartments in Melbourne, has left behind a staggering $200 million debt, according to liquidators.

The company called Caydon, which was backed by prominent figures in Asia, went into administration at the end of July.

Despite boasting a portfolio of $4 billion worth of projects at one stage, according to the liquidator, the failed development company has now left millions in debt.

It blamed Covid lockdowns and pricing factors for its demise and had an estimated debt of $200 million owed to its financier OCP Asia and $285,000 to Mercedes-Benz for a luxury wagon, a report to creditor’s showed.

It also had an outstanding tax bill of about $7.5 million and had not filed a tax return in 2020 or 2021, the report said, while 23 employees were also owed money including one employee who claimed they were out of pocket by $21,000.

While the developer made $3.7 million in pre-tax profit to the year to June, it was unable to meet immediate debts and liabilities outweighed its assets by almost three times, the creditor’s report revealed.

Have a similar story? Continue the conversation | [e-mail]

The Caydon development in Alphington. Picture: Supplied

Artist impression of a tower proposed for a North Burleigh site by Victorian developer Caydon Property Group. Picture: Supplied

At the time of its collapse in July, Caydon’s managing director Joe Russo said it had delivered 3000 apartments, hotels and offices since it started but it had faced a 45 per cent rise in building costs over the past year.

“Sadly, over the last few years, Caydon has had to deal with one difficult market situation after another,” he said.

“Pressure on construction costs resulting in builder insolvencies and supply chain interruptions, and now the interest rate pressures and negative house price sentiment, has placed additional pressure on our operations.”

Stream more business news live & on demand with Flash. 25+ news channels in 1 place. New to Flash? Try 1 month free. Offer ends 31 October, 2022 >

HOME by Caydon development in Alphington. Picture: Supplied

Claims of $15.6 million

Among Caydon’s assets were around 130 unsold apartments at its Home development in the affluent suburb of Alphington, which ranged in price from just under $600,000 to almost $700,000.

There was also “a significant land bank in the Melbourne suburb of Cremorne where Caydon was developing a $1bn commercial precinct at the site of the old Nylex silos”, according to The Australian.

The creditor’s report outlined 43 unsecured creditors, who were owed $15.6 million from the failed developer.

This included $535,000 outstanding to law firm King & Wood Mallesons, $281,000 to real estate agency Knight Frank Australia, $124,000 to Deloitte Private and $44,000 to Google.

Property Developer Caydon’s Nylex site back in 2020. Picture: Alex Coppel.

Home by Caydon residences and communal spaces in Alphington. Picture: Supplied

Axed projects

Other Australian developers have faced difficulties in recent times, axing projects and blaming skyrocketing construction costs and labour shortages.

Perth developer Sirona Urban killed off a $165 million luxury tower, where more than 50 per cent of apartments had been bought off the plan, which was set to one of the tallest apartment buildings in the state.

Sirona Urban owner Matthew McNeilly said in July construction costs had risen by 30 per cent in the past 10 months, while a shortage of tradies were also causing problems.

In the same month, Melbourne developer Central Equity abandoned plans to build a $500 million apartment tower on the Gold Coast blaming the crisis in the building industry and surging construction costs for making the project unprofitable.

Earlier this month, a $180 million development in Brisbane which was set to deliver 250 homes, was shelved by developer Cedar Woods, blaming rising costs, labour shortages, significant rainfall events in Queensland and extended construction timelines.

One homeowner described the development company’s decision as an “absolute joke” claiming that it would leave his family financially “screwed”.

Greville, Wooloowin development by Cedar Woods have decided not to continue the development even though of work is still happening on the site. Picture: David Clark

Construction crisis

It comes as the construction industry faces a crisis with a spate of collapses this year.

The latest was Queensland residential builder Oracle Building Corporation Pty Ltd, which went into liquidation on Wednesday leaving 70 staff and 200 suppliers and subcontractors out in the cold, as well as 300 homes that were in the pipeline to be completed.

The crisis has been caused by a perfect storm of supply chain disruptions, skilled labour shortages, skyrocketing costs of materials and logistics, and extreme weather events.

Another Queensland builder, Besse Construction, collapsed only last week owing $1.7 million.

Earlier this year, two major Australian construction companies, Gold Coast-based Condev and industry giant Probuild, went into liquidation.

In July, Snowdon Developments was ordered into liquidation by the Supreme Court with 52 staff members, 550 homes and more than 250 creditors owed just under $18 million, although it was partially bought out less than 24 hours after going bust.

Condev building sites on the Gold Coast back in February. Picture: Nigel Hallett

Others joined the list too including Inside Out Construction, Solido Builders, Waterford Homes, Affordable Modular Homes and Statement Builders.

Then there was NSW building company Willoughby Homes, which went into voluntary administration last week, leaving at least 30 homes in limbo.

Also shuttered was Norris Construction Group, which was in Geelong, collapsed in March with $27 million in debt. It owes $3.2 million to around 140 staff that it is unlikely to be able to repay, according to the liquidator’s report.

Plus there was Melbourne-based company Blint Builders collapsed with approximately $1 million in outstanding debt owed to 50 creditors, according to the liquidators.