Subcontractors and other unsecured creditors of collapsed builder Porter Davis likely won't see any of the more than $71 million owed to them, according to liquidators
Collapsed builder Porter Davis Homes Group's liquidators have stated that unsecured creditors, including struggling subcontractors, are unlikely to receive payment of the more than $71 million owed to them.
The Commonwealth Bank, on the other hand, is expected to recover almost all of the $33 million it is owed.
The building giant collapsed earlier this year. The appointment of liquidators Grant Thornton in March has left around 1,700 projects in Victoria and Queensland in limbo, with 779 contracts signed, according to The Australian.
The liquidation process involves breaking up the Porter Davis home building empire, with other builders taking on projects they believe can be turned into profitable work. However, this comes at a time when the construction industry is facing a crisis due to rising costs and financial pressure. Grant Thornton has classified customers with incomplete home builds as "contingent" creditors, but they caution that not all customers will be covered as most of the funds from the $147.2 million collapse are unlikely to be recovered, according to The Australian.
Simonds Group has stepped in to assist some Porter Davis customers with unfinished homes, initiating completion and rectification works for those with domestic building insurance claims. Additionally, Crown Cabinetry director Wayne Speijers, who suffered a loss of around half a million dollars, has tried to deliver pre-built kitchens to affected Porter Davis customers.
Subbies left out in the cold
However, subcontractors are not expected to receive any payment from the liquidation, The Australian reported.
The Queensland Building and Construction Commission (QBCC) has approved numerous return-of-deposit claims and is currently assessing additional claims under the Queensland Home Warranty Scheme. However, some customers may still need to engage new builders and may have to pay extra to complete their homes. Staff owed $18.09 million will receive a partial dividend, but unsecured creditors, including subcontractors owed $71.55 million, are unlikely to be paid.
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Subbies United spokesman John Goddard told The Australian that it was par for the course for subcontractors not to see a cent when builders failed.
“How is it possible for a builder to lose almost one fifth of a billion dollars?” Goddard said. “I will tell you how. Most switched-on suppliers would have had them on stop credit long before, but subbies ‘contractually’ cannot do that quickly. They keep building and working away, getting strung along with payment delays, being asked and coerced to ramp up production – and when they ask why their payment claims are late, they are given excuses. The builder just doesn’t pay them.”
The Porter Davis failure isn’t the only builder collapse to leave subbies high and dry. It was recently reported that contractors and subcontractors affected by the collapse of national building firm Lanskey Constructions were unlikely to recover any of their outstanding payments.
In Porter Davis’s case, Grant Thornton has identified several classes or subclasses of assets that may be recoverable in the liquidations, including the sale of the Porter Davis Homes multiple dwelling business to the Nostra Property Group, completion of 375 homes, and the sale of the company's intellectual property.
The liquidators' preliminary findings indicate that there is no compelling evidence that the Porter Davis companies were insolvent before February 2023, although investigations into potential insolvent trading claims are ongoing, The Australian reported.
Creditors are scheduled to meet on June 28 to further discuss the situation.
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