Grant Thornton appointed liquidator of 14 companies in the Porter Davis group

Failed talks to find a white knight for the nation’s 12th largest home builder left liquidators on Friday ordering work on 1700 homes across Victoria and Queensland to cease immediately.

Porter Davis' Brisbane office and display room was empty on Friday. Picture: Glen Norris

Porter Davis Homes Group, the nation’s 12th largest home builder, has collapsed after a last-ditch rescue plan failed.

Grant Thornton Australia were appointed liquidators of 14 companies in the PDH Group on Friday leaving at least 1700 homes unfinished across Victoria and Queensland.

Grant Thornton on Friday said investigations would look into the reasons for the collapse but attributed it to rising input costs, supply chain delays, labour shortages, and a drop in demand for new homes in 2023, which hit the group’s liquidity.

Grant Thornton’s Mr Byrnes said the liquidator would undertake investigations into the circumstances which led to its appointment after an earlier rescue bid failed.

He declined to comment on the specifics of the company but called out the headwinds which are confronting the home building sector.

“It’s had rising input costs, it’s had difficulties in accessing labour,” he said. These problems worsened this year as forward sales had “really fallen off” industry-wide.

“Those builders that do have enough funding and enough capital to trade through the loss making contracts ... they’re looking at the end of that pipeline and seeing a real fall away in new profitable sales coming in,” he said.

“It’s an issue right across the sector but, ultimately, they got to the point where they just ran out of cash to be able to continue to trade,” he said.

Mr Byrnes said Porter Davis had been in talks with a “number of parties” about a potential sale or investment into the group.

“At the same time, they ran out of cash to keep funding the business in an ongoing manner,” he said.

Said Jahani, Matt Byrnes and Cameron Crichton are handling the liquidation of the group that had been offering steep discounts to attract new customers and bolster cashflow.

The appointment is over all PDH Group operating and employing companies in Victoria and Queensland, except Englehart Homes.

Englehart Homes, which was acquired by the group in late 2021, is not subject to the appointment and is continuing to operate in its own right.

The liquidators said they would not be trading the PDH Group companies and works on current building sites would cease immediately.

The also said they were working to support customersand employees, including engaging with key stakeholders and potential interested parties who may be willing to take over the current customer contracts. Porter Davis has more than 1,500 current homes in progress in Victoria and a further 200 homes in Queensland.

Customer fears

The privately-owned home builder was set up in 1999 in Melbourne and grew to be one of the state’s largest before expanding to Queensland.

It specialised in residential construction, house and land packages, and interior design.

It was set up by Anthony Roberts who is a director of the parent company PDH Group with Paul Wolff and Bruno Santi. They all have shares in the business and with more than a dozen subsidiaries there are many other owners with smaller stakes.

It had about 779 signed contracts with customers where building had yet to commence, with scores of customers left in the lurch by the collapse.

Hayley Tuck from Melbourne told a Facebook discussion group that her home’s slab had been poured eight months ago but nothing had been done since.

“The frame was due to start on the April 13. I don’t even know what to do now,” she said.

Another customer Nicky Akiki said she had just spoken to their site supervisor who no longer employed by the company.

“He said he doesn’t know what will happen from here, PD (Porter Davis) has insurance on every house so I guess they will have to deal with the insurance companies or we’ll have to get another builder to complete the work,” she said.

Another customer said the situation was “very frightening.”

A Porter Davis disaply home.

Grant Thornton said it would try to re-spark interest in parts of the company, and find a large builder to finish off some homes.

“We have made immediate contact with a number of parties that we think could potentially have an interest in parts of the Porter Davis Group, particularly in picking up some of those builds, and continuing to work with the customers to continue them,” he said. “Those discussions will continue over the next week or two.”

Grant Thornton will try parties that were in the first process and may look to bring “one or two” other parties in.

The liquidator is working through the total number of creditors owed money but it is expected to number more than 1500, including trade suppliers and contractors.

For customers whose builds have stopped much will hinge on Grant Thornton‘s efforts to resuscitate rescue talks.

“If there’s a solution through the discussions that we’re having at the moment - those urgent conversations we’re having with larger builders - and we’re talking about reputable names in the market who could come in, if there’s some success with that, some of those homeowners might have an option to work with that new builder to complete their builds,” Mr Byrnes said.

But he warned that there was “no doubt” that a large number of homeowners who did not find a solution through that process would need to find new builders on an individual basis, if there was not a more “holistic” solution for them.

Porter Davis has around 470 employees and was forecasting revenue of $555m in fiscal 2023.

The PDH Group board stated they regret the current circumstances and that their efforts to secure a funding solution for the group could not be achieved.

The board further acknowledged the group’s employees for their hard work and commitment to Porter Davis, and “were hopeful that a solution could be found to support Porter Davis customers in completing their homes.”

Queensland fallout

According to the Queensland Building and Construction Commission (QBCC) records, the group’s Queensland subsidiary PDH Qld held a category five licence allowing them to carry out residential projects totalling up to $120m each year.

The Queensland operations have so far this financial year completed 126 homes worth in excess of $78m.

The previous year, it built 186 homes worth more than $94.3m.

According to its annual financial report lodged with ASIC, the parent group made a net loss in the 2021 financial year of $692,833 compared to a $5.9m profit the previous year.

Revenue at its key operating subsidiary, Barrett Property Sales & Administration slipped from $65m to $53m over the same period. Subbies United spokesman John Goddard said Queensland subbies had been caught out by the collapse and were hurting.

“One subbie has been told on a weekly basis that they would be paid the $40,000 they were owed,” said Mr Goddard. Mr Goddard said the company didn’t have a long history in Queensland and interstate factors appeared to be partly to blame for the hurt now being felt by local subbies and customers.

“You never know what a national company is up to in other states and that can have a fatal effect on their Queensland operation,” Mr Goddard said. “Victorian based companies have a habit of doing this.”

He said in an act of desperation the company had substantially cut their build price by up to $50,000 to attract more deposits and prop up  ailing cash flow.

Home owners in Queensland who are affected by the liquidation of the Porter Davis group will be able to seek assistance through that state’s home warranty scheme.

The QBCC administers the Queensland Home Warranty Scheme (QHWS), which can help eligible owners to complete their homes or rectify defective building work.

The QBCC said it will continue to work with Grant Thornton Australia on the next steps for assisting home owners.