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Large-Scale Residential Builder Collapse
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.
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.
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.
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.
As a result of the Liquidators' considered actions:
Applying a strategic approach to a challenging situation highlighted how various stakeholders' interests can be safeguarded even in highly distressed scenarios.
Matt joined Grant Thornton over 25 years ago and has held a number of leadership roles including National Head of Restructuring Advisory, National Head of the firm’s manufacturing industry group, and forming and leading Grant Thornton’s Asia practice. He is a passionate champion of the firm, its clients and people.
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It is important for business owners facing financial distress to understand all the options available to them. Small Business Restructuring (SBR) offers a pathway for small and medium sized Australian companies experiencing financial pressure to deal with unmanageable debt, reset operations, and continue trading through and beyond difficult times. SBRs are also a cost-effective solution to save a business compared to a liquidation shut down.
