Administrator warns of dire financial situation for major Sydney developer

One of Sydney’s largest and most prolific housing developers stands on the verge of liquidation as the 24-hour deadline to find $20 million to fund the company for a month nears.

As Treasurer Daniel Mookhey called on private lenders to take responsibility for the collapse of Bathla Group and Premier Chris Minns defended his government’s decision not to bail out the developer with public money, private lenders on Tuesday began divvying up control of Bathla’s dozens of active construction sites, centred around north-west Sydney.

It followed a tense 24-hour period for administrators, who spent Monday night meeting with private lenders in a last-ditch effort to get funding. Stephen Longley, a senior managing director for administrators Teneo, said before the meeting he was hopeful of a positive outcome.

But his tune had changed by early Tuesday morning. Speaking on Nine’s Today program, he described the financial situation as “very dire” and said Bathla would need to be wound up as soon as Tuesday evening if no more funds were provided.

“We’ve had intensive discussions with lenders, but I don’t think we’re going to get enough funding in place to be able to finish those 45 projects. We need to put together a minimum viable structure to deliver the projects,” he told Today. “We’ll start planning at the end of the day for the wind-down of the business, and we’ll be meeting with staff. Payroll is due on Thursday. As administrators, we’re personally liable for paying that payroll, even if a company doesn’t have any money, which it doesn’t.”

Some private capital lenders, who have emerged as a key element in Bathla’s collapse, have taken control of individual worksites and will be responsible for delivering certain projects. For instance, private equity group PAG has been funding Bathla’s major apartment complex in Pemulwuy, 10 kilometres west of Parramatta. Dozens of subcontractors were told in an onsite meeting on Tuesday morning they would be paid by PAG to finish the project.

One foreman for the Pemulwuy site, who identified himself as Charbel, told reporters outside the meeting he was assured by the administrators that the Pemulwuy apartment block would be completed. But he was less hopeful about the other Bathla sites he was working on.

“They have no idea what is going on there,” he said. “[We’re] still waiting for the administrator. They say they have zero money on the accounts.

“I have four kids, I have staff to pay … I have contractors to pay, and we don’t know. That’s our problem in the industry. No one can guarantee our money. If we do any work, for any business, we’re always losing.”

Mookhey, speaking while on a trade trip in New Delhi on Tuesday afternoon, called on the private lenders to step in to support the administrators, saying it was not fair to ask taxpayers to bail out the companies that “took the risk”.

“The first obligation belongs to the private credit firms,” he said. “These are some of the most sophisticated lenders in the Australian economy. They took the risk. The onus is on them to step up and support the administrators.”

Premier Chris Minns, also on the trip, said he was concerned about the risk of contagion across the construction industry as a result of the collapse but stood by the decision not to bail the company out.

“I am concerned about it. Like most volume builders, they use a range of contractors as part of their building, so we’re keeping an eye on that,” he said.

“[But] they effectively asked for a line of credit from NSW taxpayers, and it’s not my money; it’s NSW taxpayer money. And I wasn’t convinced that that was the best use of taxpayer money, particularly as we didn’t have a detailed or deep understanding as to how Bathla got into these circumstances in the first place, and what the exposure would be for NSW taxpayers if we did tip money in.

“I think the worst-case scenario would have been we extended a line of credit, we gave them tens of millions of dollars, and then the inevitable happened in a couple of weeks’ time.”

The crisis represents a major dent in the NSW government’s housing targets: the company was constructing about 2500 homes – 4.5 per cent of all homes being built in the state – and had plans for 14,000 more.

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