On 31 March 2023, the Porter Davis Group of Companies (the Group) – 14 entities engaged in residential building – went into liquidation. Grant Thornton’s restructuring partners, Said Jahani, Matt Byrnes and Cameron Crichton were appointed as liquidators. 

At the time of appointment, there were over 2,600 onsite and pre-site building contracts across multiple entities within the Group. The Group’s banking facilities were overdrawn, and the shareholders had confirmed they were not in a position to inject further funding.  

“With no funding immediately available to support ongoing trading, we had little choice but to cease all substantive construction activity.” – Matt Byrnes

Challenge

Residential Builder collapses are often flush with stakeholder issues but limited in terms of realisable assets. 

"We received and responded to almost 8,000 discrete queries from stakeholders including homeowners, subcontractors, suppliers, financiers, property developers, insurers and state-based industry regulators." – Matt Byrnes

Having one of Australia’s largest residential builders collapse during a national housing crisis ensured the experiences of stakeholders, particularly homeowners, suppliers and subcontractors were closely monitored by the news media. 

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Solution

To address stakeholders' queries, the team established a dedicated contact centre and updated the stakeholder FAQs regularly. They also took the initiative to introduce potential replacement builders to PDH customers.

Since no credible offers were received for the purchase of the Group’s business ‘as a whole’, the assets were split into distinct bundles for sale, including building contracts, intellectual property, and real estate properties.  

“We knew the Group’s interests in real property would support repayment of the majority of debt owed to the senior lender. The key to securing an outcome for other classes of creditor rested on our ability to monetise the value of WIP and intellectual property developed by the Group.” – Said Jahani

Fortunately, the Group had a number of townhouse developments and speculative home contracts carrying significant WIP which was able to be sold and novated to other industry participants. The Group’s significant portfolio of building plans and designs was also able to be sold.

Being in the midst of a national housing crisis, it became quickly apparent that some homeowners were desperate to secure occupancy of their near complete homes.   

“We identified contracts where Occupancy Permits were within reach and assembled a team to liaise with surveyors, certifiers, and third-party trades and suppliers to undertake the final works necessary to obtain Occupancy Permits for properties. This process also realised a significant portion of final stage claims that may have otherwise been disputed by customers.” – Cameron Crichton

Outcome

As a result of the Liquidators' considered actions:

  • The Company’s pre-appointment insurance policy was preserved for the benefit of owners of partially completed homes;
  • Homeowners were provided with the necessary information to ensure they understood and appropriately managed their options for completing their home build  
  • Dozens of homes were delivered to homeowners following the appointment;
  • 400 building contracts were novated to a new home builder;
  • Building designs and plans were made available where required by customers;
  •  Asset realisations will likely support the full repayment of c.$34m senior secured lender and all outstanding employee wage and superannuation entitlements;
  • Employees retained to assist with the winding up process we able to secure new employment in an orderly fashion;

Applying a strategic approach to a challenging situation highlighted how various stakeholders' interests can be safeguarded even in highly distressed scenarios.

Cameron Crichton

Cameron has extensive experience in managing businesses across a broad range of industries with a key focus on building and construction. He is focused on achieving commercial outcomes tailored to the specific needs of the client (including financiers, private companies, government and investors). Core expertise areas includes stakeholder management, supply chain reviews, financial viability reviews, working capital management, profit improvement advice, pre-lending reviews, debt advisory, restructuring and commercial consulting.
Cameron Crichton
Cameron Crichton
Partner - Financial Advisory

Said Jahani

Said Jahani specialises in turnaround and corporate restructuring and can assist clients in tackling not only operational and imminent liquidity issues they may be facing but more importantly, the underlying strategic issues around their business.
Said Jahani
Said Jahani
National Managing Partner - Financial Advisory 

Matt Byrnes

Matt Byrnes is Grant Thornton’s National Head of Restructuring Advisory. He has particular expertise in assisting businesses in receivership, liquidation and voluntary administration.
Matt Byrnes
Matt Byrnes
Partner & National Head of Restructuring Advisory