10 April 2023

PBS Building debts balloon to $60m as administrators win more time to complete investigation

| Ian Bushnell
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building site

The Capital Food Market site in Belconnen was the first ACT site to shut down and resume work, with a new builder. Photo: Ian Bushnell.

The number of claims from PBS Building creditors has grown to 450 and the amount owed now totals $60 million, according to the administrators, RSM Australia.

The update comes as the Federal Court granted the administrators more time to complete their investigation into the collapse of the Canberra-based building firm and five of its companies.

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RSM Australia cited the complexity of the work, and the administrators now have until 30 June 2023 to lodge the final creditor’s report and until 7 July to hold the second creditor’s meeting.

RSM Australia partner Jonathon Colbran said the administrators also advised the court of the increase in claims but said there may be some duplication across claims, for example between principals and subcontractors.

“New lodgments followed the meeting of creditors on 17 March. This number may change still as claims are assessed and verified over the course of the administration,’’ he said.

“The additional claims, combined with further investigations by the administrators, have lifted the current estimated value of creditor claims to more than $60 million across all five PBS companies.

“However, the final figure will not be known until the administrators complete their investigations and detail their findings in the creditor’s report. A significant number of creditors have, for now, lodged claims that are preliminary estimates.’’

Justice John Halley described the extension as “not unduly lengthy’’ and “proportionate to the complexities of the PBS companies’’.

“I am satisfied that the administrators are confronted with relatively large and complex administrations and they need further time to pursue the key tasks summarised … in order to assess the financial position of the PBS companies and provide creditors with sufficient information to make an informed decision at the second creditor’s meeting.’’

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Mr Colbran said that if the administrators were able to deliver the final report earlier, they would.

He said extending the timeline to resolve the future of the PBS Building companies was in the best interest of creditors.

“We understand that all stakeholders want to see the future of these companies and the outcomes for creditors resolved as quickly as possible so that everyone has a clear path to move forward,’’ he said.

“However, we cannot sacrifice the potential financial return for creditors for a speedier resolution. That’s why we sought the extension of the convening period.”

The administrators were working around the clock to unpick the highly complex and detailed contractual, legal, insurance, operational and legislative issues associated with investigating the operations of five different companies engaged in multi-million-dollar contracts across 82 projects in three different states and territories, Mr Colbran said.

Justice Halley also acceded to the administrators’ request to maintain the existing PBS Building bank account structure that was in place at the time of their appointment, recognising that it “will streamline the administrations and create efficiencies’’.

Mr Colbran said the administrators flagged this situation with creditors at the first meeting on 17 March.

“Currently there’s one centralised treasury account for all entities. This is not an uncommon way for companies of this size to structure their financial accounts,” he said.

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PBS Building went into voluntary administration on 7 March, after sites across the ACT, NSW and Queensland closed down.

Eleven ACT projects were impacted, including the Capital Food Market project in Belconnen, which Construction Control has taken over, and The Melrose in Woden, where Doma has engaged long-time partner Bloc.

Other known ACT projects include the Stockland townhouses at The Parks development in Red Hill and 45 flexi-living homes at Ginninderry.

The administrators are still to release the full list of creditors, which is known to be more than 1000.

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They must have been trading whilst insolvent which is against the law.

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