Probuild’s collapse is being described as a “nightmarish” situation by the construction company’s administrators, with 800 workers owed $14 million and other sorts of creditors potentially owed much more.
Key points:
- The Australian parent company of construction giant Probuild went into administration last week
- Administrators say 2,300 entities or people have so far come forward with claims they are owed money
- Almost 800 workers are owed $14 million in entitlements
Probuild’s parent, WBHO Australia Group, went into administration last week, putting the construction giant and 17 related companies into limbo.
WBHO Australia (WBHOA) directly employs almost 800 people and has thousands more contractors working on its projects.
The company has annual revenues of $1.4 billion, with 18 major commercial and public sector projects in varying stages of development across four states.
Today in the Federal Court, Deloitte’s lawyer Hamish Austin described the situation as “nightmarish”, with administrators still trying to get a handle on the company’s assets and creditors.
“The mind boggles at the amount of work the administrators have been undertaking and are required undertake to try and get across this type of administration,” he said.
The lawyer added that access to a key construction site in Brisbane was also being “impeded by floodwaters”.
“It’s what some may call a perfect storm,” he said.
“It’s certainly the final insult, if I put it that way, in trying to make sense of a highly fluid and complicated administration.”
Mr Austin told the court they had 2,300 creditors — people or entities claiming to be owed money — lodge claims so far. Some 300 of those only signed up on Tuesday, with more expected to come forward.
Deloitte is seeking to use an automated app to deal with the large number of creditors.
How much is on the line?
Austin told the court that the group had 786 employees across Australia.
A total figure on the overall liability of the company has not yet been revealed and Deloitte is seeking to redact the amount of some creditors’ claims.
Given the situation, Deloitte applied to the court to have an extension on the time it has to compile a preliminary report on the administration.
At this stage, it has been given an extra 21 days.
Deloitte’s lawyer, Hamish Austin, reiterated to the court that WBHOA’s administration came after financial support was withdrawn from its parent company in South Africa.
The Australian group is owned by South African construction giant Wilson Bayly Holmes-Ovcon Limited (WBHO), which is listed on the Johannesburg Stock Exchange.
“WBHO has determined that, with effect from 22 February 2022, the company through WBHOC will no longer provide financial assistance to WBHOA,” the South African company told investors last week.
It said it had pumped $183 million into the company over four years.
It blamed Australia’s stringent COVID-19 restrictions as a major factor in WBHOA’s unprofitability.
Deloitte’s Hamish Austin said the South African parent had “effectively washed their hands of the Australian group”.
“They may no doubt may find some financial interest in participating at some point but that’s yet to emerge.”
Despite a boom in construction since the pandemic, success is not guaranteed, even for the biggest of builders.
Grocon Group constructed some of the tallest buildings in Australia before it went under in 2020, blaming a single project for sinking the decades-old company.
New figures from credit reporting agency CreditorWatch show construction is the sector with the highest rate of arrears, with 12.4 per cent of businesses more than 60 days behind in making payments.
