Sustainable developer Nightingale racks up almost $500,000 in debt

Not-for-profit development group Nightingale has called in a restructuring expert to help it broker a cents-in-the-dollar deal for its creditors, including the Tax Office, as it tries to recover from a mass exodus from its board in the second half of last year.

Nightingale, which is well known for its aim to revolutionise the apartment industry by creating sustainable, small-footprint homes, called in restructuring firm Rodgers Reidy in October to help it work through its business problems.

Premier Jacinta Allan with Nightingale’s then-CEO, Dan McKenna, at one of Brunswick’s Nightingale-designed apartment blocks in October.Credit: Chris Hopkins

The restructure is not expected to have any impact on the group’s developments already under construction, which include projects in Coburg and Brunswick.

The boutique developer, which includes a percentage of community and affordable housing in its buildings, has completed 21 projects, according to its website, including 15 developments in the Brunswick area. It was also recently selected by the state government to participate in the request-for-proposal process for development of state-owned land near designated transport hubs.

The appointment of the restructuring practitioner came as the group recorded an exodus of six directors between July and November last year and the departure of its chief executive in September.

Nightingale executive director Toby Dean said the group had used the simplified debt-restructuring program to reset the business, which would continue with its planned projects.

“Nightingale Housing is committed to housing people in diverse, sustainable and connected communities. We are continuing on our mission to deliver much-needed housing, with a steady pipeline of new homes alongside projects recently completed, under construction, and in planning,” he said.

Nightingale’s Skye House project in Brunswick.

“As a small not-for-profit organisation, we are constantly evolving to meet the growing demand and changing market conditions. The restructuring process in 2024 was a key step in preparing us for an even stronger 2025.”

Under the federal government’s simplified debt-restructuring program, small businesses with less than $1 million in liabilities can appoint a restructuring expert – as opposed to an administrator – to help them quickly resolve a company’s financial problems.

Dean said the board departures were part of the restructuring process the company had gone through, and the group’s co-founder, Jeremy McLeod, was currently in the role of managing director.

Three of those directors were property experts appointed to the group’s board of directors in October and November 2023 as part of a strengthening of the group’s structure as it branched out into projects in Sydney, including a building of micro-apartments in Marrickville, and in Adelaide.

Upcoming projects listed on the group’s website include two developments in Adelaide, as well as a full slate of projects in Melbourne including the expected 2026 unveiling of its co-development at the Gasworks site in North Fitzroy, being facilitated by the state government.

“We are focusing our attention on Victoria at the moment, but we will have some public announcements in the next few weeks about that as a whole,” Dean said. “There will be some projects in South Australia but none currently planned for NSW.”

The media-savvy group also changed its structure in March, establishing the Nightingale Foundation, a charitable organisation, and winding down the debtless Nightingale Housing via a voluntary liquidation process.

According to documents filed with the corporate regulator, Nightingale racked up a $410,000 debt with the Australian Taxation Office and a $62,000 debt with the State Revenue Office.

Under the restructuring deal, those two creditors will receive a payment equivalent to 30¢ in the dollar. The ATO voted to support the restructuring plan, while the State Revenue Office chose not to back the deal for creditors.

Dean said all staff superannuation was paid and up-to-date before the restructure. The ATO debt related to unpaid pay-as-you-go payments – the amount deducted from workers’ wages that is supposed to be sent by a company to the government for taxes – and for unpaid GST.

Nightingale is synonymous with a type of property development that emphasises sustainability and, in the group’s own words, “unashamed material honesty”.

“We take out things like second bathrooms, individual laundries and individual car parking to reduce the cost of construction and ongoing maintenance,” the group says on its website. The group’s developments also mostly eschew air-conditioning, instead using “passive ventilation”, insulation and “solar shading”.

It’s not the first time the group has restructured; it also reconfigured its business format in 2021. The Nightingale approach has been viewed cynically in the ultra-competitive property industry due to its tendency to pass off construction savings – such as smaller floor plans and unfinished ceilings – as having a lower environmental impact while also touting the benefit of “small footprint living”.

One of the directors who left the board midway through last year, Michael Lennon, said the restructure was necessary.

“They chose to revisit their business model. They were originally running the company from one project to the next project, and they needed to accumulate more income and more assets to safeguard the business,” says Lennon, who has had a long career in property development, particularly in community and social housing.

“It was clear they needed to restructure. They’re now putting together something more enduring.”

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