More than ۲۰۰ workers at Sydney-headquartered Bathla Group have been stood down as administrators of the embattled property developer seek emergency funds to stave off a company-wide collapse.
The insolvency advisory Teneo said on Monday that new short-term funding arrangements would only allow Bathla to continue construction on some of its ۴۵ construction sites, though it did not identify which projects were being prioritised.
Teneo said in a statement that construction on all other projects would be suspended, resulting in ۲۱۳ employees, representing about ۶۰% of Bathla’s workforce, being stood down.
Bathla is a major Sydney-based developer that also has operations in regional NSW, South Australia and Victoria.
Thousands of homebuyers were left in the lurch by the announcement on ۲۵ August that the developer had gone into voluntary administration, weighed down by $۳.۴bn in debt, leaving many buyers with partially complete homes.
The developer was also behind on its payroll, and many subcontractors are out of pocket.
Teneo has said its immediate priority was to finish the estimated ۲,۵۰۰ homes on which construction had already begun, and that it was not in a position to refund any deposits.
Administrator Stephen Longley said on Monday that short-term funding arrangements with five lenders would allow construction to continue on some projects.
“Significant work remains to secure the funding required to progress and ultimately complete all projects currently under construction,” Longley said.
The new funding means Bathla can continue limited operations for another two weeks, while longer-term financing arrangements are sought.
Bathla’s future is complicated by the presence of more than ۴۰ lenders with control over different assets.
Its operations rely on the private credit market, which tends to offer finance at higher interest rates and with more stringent terms and conditions than commercial banks.
Many developers have been grappling with rising rates this year, that leads to increasing repayments as the same time as buyer appetite has reduced.
If Bathla collapses, its construction sites would freeze immediately as property assets are wound up, sold off or redeveloped, with far-reaching consequences for the wider property market already well behind housing targets.
Cameron Kusher, an independent property economist, said that while broader economic issues are playing a role, “businesses don’t fall into this sort of trouble overnight”.
“The market has become more difficult this year with higher interest rates, falling established housing prices and tax changes but … it is highly likely there were challenges for this business and others that have fallen into insolvency long before you’re reading about it in the newspapers.”
