What happened to construction giant Probuild after $250m collapse
The construction giant sent shockwaves when it collapsed owing millions and with 18 projects underway. Now liquidators have revealed what happens next.
When construction giant Probuild collapsed earlier this year, administrators Deloitte revealed they were facing a “nightmarish” situation with at least 2300 individual creditors identified and more than $14 million owed to 784 workers.
Overall, there were $250 million in outstanding debts owed by the company, according to administrators.
But Jason Tracy, a Deloitte partner who helped lead the administration, said there had been a “significant milestone” achieved for 200 small creditors.
Probuild failed after its parent company, WBHO South Africa, announced is was withdrawing any financial assistance in February after injecting millions to prop them up as it grappled with the government’s “hard line” stance with handling the pandemic.
At the time there were 18 major projects around Australia worth around $5 billion underway, including the $1 billion accommodation and entertainment complex The Ribbon in Sydney and the future headquarters of global biotech giant CSL in Melbourne.
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Deloitte had supported a proposal from WBHO in February that would have seen smaller creditors receive between 50c and 71c in the dollar and others between 3.9c and 24.6c.
But there has been a win for smaller creditors owed $25,000 or less – including contractors – who will now receive the full amount owed to them, Deloitte revealed, meaning payments of $1.8 million in total would be made.
In September, former employees received $16 million in outstanding entitlements.
Deloitte’s Sal Algeri said they had “one shot” at saving the business.
“As administrators, our key objective at the outset was to maintain the business operations and employment to the greatest extent possible, Probuild being one of the few contractors in the industry able to undertake large scale projects,” he told The Australian.
“We recognised the value in the strong reputation and relationships that the group had with many key stakeholders including the unions, principles, and other key stakeholders.
“We worked closely with management to preserve those relationships which enabled us to move quickly and keep projects ‘live’.
“In a situation like this, you also only get one shot at saving the business by finding the right buyer, so early engagement with stakeholders and eventual novation of contracts to a new owner were all highly critical to the outcome.”
In March, the five Victorian Probuild projects were acquired by another construction firm called Roberts Co, which also ensured the continuity of employment for more than 150 Probuild head office and site employees and saved $100 million in potential creditor claims.
It took over projects including the CSL headquarters, UNO Melbourne a 65 level residential tower and Caulfield Village the $300 million Melbourne site, a build to rent project, offering eight buildings with 437 apartments.
Administrators were also able to secure the sale of West Australian operations to ASX-listed SRG Global for $15.2m.
Deloitte’s David Orr said fixed price contracting and inappropriate risk sharing models had caused pain in the construction sector.
“All too often the sector displays weak balance sheets dependant on debt funding models that provide little or no resilience for even a small proportion of ‘bad projects’,” he said.
After Probuild’s demise, a spate of construction companies have collapsed this year with more than a dozen failing caused by a perfect storm of supply chain disruptions, skilled labour shortages, skyrocketing costs of materials and logistics, and extreme weather events.
In August, major Queensland residential builder Oracle Platinum Homes went into liquidation owing $14 million and impacting 300 homes, 200 suppliers and subcontractors and 70 staff members who were made jobless.
Another Queensland builder, Besse Construction, collapsed the same month owing $1.7 million.
Industry giant Gold Coast-based Condev also went into liquidation earlier this year, following the same fate as Probuild.
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.
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 that collapsed with approximately $1 million in outstanding debt owed to 50 creditors, according to the liquidators.
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