Bathla had ‘strange corporate structure and a lot of debt’
Embattled building group sacks more than half its staff as premier says no to any potential bail out.
A DEBT-riddled developer has stood down more than 200 staff and halted a stack of construction projects but a premier has defended a lack of state government intervention.
About 213 of Bathla’s 350 staff were officially stood down during a company-wide meeting in Sydney on Monday.
Administrators said short-term funding would keep some of the firm’s projects going for another two weeks.
Insolvency advisor Teneo announced it secured funding through five lenders linked to the projects, without disclosing amounts or participants.
NSW premier Chris Minns said the government was talking with administrators but defended not spending public money bailing out the Sydney-based business.
Minns described Bathla’s corporate structure as strange and highly reliant on debt from private lenders.
“I can’t just hand money over to an administrator, particularly when the finances of this particular firm are so opaque and difficult to decipher,” Minns said.
“There’s been a lot of commentary about the way this company … was managed and run, particularly the enormous amount of debt it ran up.
“This is a very strange corporate structure involving a hell of a lot of debt, largely collected from private credit, not through the banks and traditional finances.”
Figures presented to creditors put Bathla’s total debt at $3.4 billion, including $3.08 billion to secured lenders, $130 million to unsecured lenders, $145 million to the tax office and $4 million to employees.
Former NSW building commissioner David Chandler said issues with Bathla were widely known and called the firm a “slow-moving trainwreck”.
“I’ve had lots of contractors come to me since I retired as commissioner, saying they’d been approached by Bathla to come and actually finish or undertake projects for them,” he said.
“They said to me there was no way because they were such a difficult group to work with … it was hard to get paid.”
Chandler said those who bought an uncompleted Bathla home off the plan should be able to get their deposit back because the money was supposed to have been held in trust.
“The people who will be most caught out here will be trade contractors and suppliers who haven’t been paid and some not paid for a very long time,” he said.
The immediate priority had been to secure enough short-term funding to maintain a minimum viable operating structure, Bathla administrator Stephen Longley said.
“Significant work remains to secure the funding required to progress and ultimately complete all projects currently under construction,” he said.
“We will continue to work closely with lenders and other key stakeholders to pursue those arrangements.”
Bathla is one of Sydney’s largest residential developers and has 45 projects under construction.
The home developer entered voluntary administration in late August after the NSW government declined to bail it out.
Fears of a wave of secondary collapses across Australia’s construction sector were raised by insolvency firm Jirsch Sutherland, pointing to the 2018 collapse of UK construction giant Carillion.
“Carillion showed just how quickly the dominoes start falling – and that full impact doesn’t happen overnight,” Jirsch Sutherland partner Chris Baskerville said.
“The initial shock hit within 24 hours but the real wave of subcontractor liquidations took weeks and months to roll through the supply chain.”
According to Bathla’s website, the group has 20,000 apartments and 7000 dwellings in its delivery pipeline, comprising a significant share of the NSW government’s target of 75,400 new homes a year for five years until 2029.
