Creditors of the five under-administration PBS Building companies have voted to wind up four companies – including two construction arms in the ACT and Queensland – but have given the NSW building company a lifeline.
The majority of creditors accepted the recommendations from administrators Jonathon Colbran, Richard Stone and Mitchell Herrett of RSM Australia to immediately liquidate PBS Building Pty Ltd, PBS Building (ACT) Pty, PBS Building (QLD) Pty Ltd, and PBS Management Company Pty Ltd.
They had recommended that only PBS Building NSW be entered into a Deed of Company Arrangement (DoCA), which aims to provide a better return for creditors rather than immediately winding up the company.
Mr Colbran said the DoCA, to be managed by litigation funder Clover Risk Funding, would give administrators more time and funding to continue legal action to recover progress claims worth more than $3 million owed to PBS Building NSW through the Security of Payments Act (SOPA).
“While there are no guarantees, the DoCA provides creditors of PBSB NSW with the best possible chance of maximising the return they may receive,” he said.
“What was made clear to creditors is that [the vote] meeting does not represent the end of developments and updates, but rather is a further step in what remains a complex and lengthy process to determine the final value of creditor claims and the value of PBS assets available to creditors.”
A number of matters still need to be resolved, including competing creditor claims and rights to assets, finalising existing and anticipated litigation, and considering the value of final creditor claims.
Mr Colbran said this process was expected to take at least 12 months.
“Each legal process needs to run its course before we reach a final outcome,” he said.
“Litigation takes time and there are a number of complex and contested matters that we are dealing with across the five PBS companies.”
According to the report, remuneration for work done thus far by the voluntary administrators was fixed at $235,000, along with $50,000 for the liquidator.
According to the 1 September administrators’ report, the highest estimated value of what’s owed to the company’s unsecured creditors (excluding employees) is just over $20 million.
More than 170 Canberra businesses and individuals have made claims in relation to PBS Building.
According to the ACCC, a business’ liquidation can impact how readily consumers can get their money back – if at all.
“Unsecured creditors are only repaid after secured creditors, such as the business’s bank and major suppliers, are repaid and after priority unsecured creditors, such as employees, are repaid,” its website stated.
“This means consumers may only get some of their money back or nothing at all.”
The companies went into voluntary administration in March.
Throughout their investigations, the administrators had found PBS Building became insolvent (i.e. unable to pay their debts) on or before 10 February 2023.
This was due to a number of factors, including being unable to secure the necessary level of additional working capital and additional support.
The administrators originally had until April to complete their investigations, but were granted an extension by the Federal Court due to the complexity of the claims.
An initial creditors report was released in June.
Several Canberra projects had to be paused due to the company’s financial situation, but all have since found new builders.
PBS Building originated in the ACT before expanding its operations to NSW and Queensland.
Administrators will continue to provide written updates to creditors when there are material updates to report. Creditors with questions can also contact RSM via email at email@example.com or (02) 6217 0228.