Probuild small creditors to be paid in full: Deloitte

Administrators of the collapsed construction giant will pay out more than 200 liabilities for those owed less than $25,000 each.

Deloitte was engaged in February after the company’s South African parent, Wilson Bayly Holmes-Ovcon, said it would not provide further financial support to Probuild. Picture: NCA NewsWire / Damian Shaw

More than 200 small Probuild creditors will be paid in full after Deloitte, the administrator of the failed construction giant, finalised a deal to settle the debts.

Deloitte was engaged in February after the company’s South African parent, Wilson Bayly Holmes-Ovcon, said it would not provide further financial support to Probuild.

Work was underway on the company’s 18 projects, including The Ribbon in Sydney and CSL’s new Melbourne head office, at that time.

In February Deloitte backed a proposal from WBHO that would have seen smaller creditors receive between 50c and 71c in the dollar and others between 3.9c and 24.6c, with almost $250m in liabilities outstanding. However, Deloitte told The Australian on Sunday that creditors owed $25,000 or less – among them contractors and others – would receive full repayment. In total, $1.8m will be paid.

The payment to small creditors follows an earlier distribution of more than $16m to former employees in late September for their outstanding entitlements.

Jason Tracy, a Deloitte partner appointed alongside Sal Algeri, Matt Donnelly and David Orr, said the payment was a “significant milestone”.

“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,” Mr Algeri added.

“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, Roberts Co finalised the acquisition of five Melbourne projects from Probuild, ensuring their completion and saving more than $100m in potential creditor claims.

The privately-owned company took control of the Uno apartment tower, the construction of CSL’s Elizabeth North headquarters and fit-out of the office tower for developer PDG, as well as ISPT’s 500 Bourke St redevelopment and Woodlink’s 502 Albert St hotel project.

WBHO Infrastructure‘s West Australian operations – part of the collapsed group – were also sold to ASX-listed SRG Global for $15.2m.

“Notwithstanding the disruptions caused by Covid-19, key structural issues in the sector revolve around fixed price contracting and inappropriate risk sharing models,” Deloitte’s Mr Orr said on Sunday.

“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’.”