Two major building companies collapse just hours apart
The collapse of two large building companies, Porter Davis Homes Group and Lloyd Group, has left thousands of projects, clients and subcontractors in limbo and sent more shockwaves through an embattled industry.
A building company projected to generate more than half a billion dollars in revenue this financial year has folded, while another builder specialising in public infrastructure hit the wall hours later.
The collapse of Porter Davis Homes Group, rated the 13th biggest builder in Australia, will cost 370 employees their jobs and puts in jeopardy 1,700 projects across multiple states.
The latest casualty of the contagion sweeping through the nation’s building industry has also plunged school and government project builder Lloyd Group into administration.
The civil design and building firm has 59 projects underway and around 200 employees whose careers are up in the air.
Victoria-based Porter Davis, which employs 470 staff, appointed Grant Thornton as liquidator on Friday (31 March). Work has stopped on the new house builds, impacting hundreds of subcontractors.
Those 1,700 work sites encompass 1,500 homes in progress across Victoria and 200 properties in Queensland, while a further 779 customers have signed contracts where building is yet to commence.
Grant Thornton Partners confirmed it had been appointed liquidators of the Porter Davis Homes Group, covering 14 companies. Englehart Homes is the only company in the group not subject to liquidation.
As with the myriad other building company failures over the past two years, liquidators blamed rising input costs, supply chain delays, labour shortages and falling demand for Porter Davis’ collapse.
As of the start of March, the Australian Securities & Investments Commission data showed that 1,236 companies in the construction sector have gone into liquidation, receivership or administration so far in 2022-23. This compares with a total of 1,284 for the entirety of the 2021-22 financial year.
Just last week a controversial Sydney builder lapsed into receivership and union and other industry stakeholders have called for immediate industry reforms.
Urban Development Institute of Australia President Maxwell Shifman told API Magazine that governments need to take the building and construction sector woes seriously.
“It’s devastating for those building their homes and for the industry alike to see two more reputable businesses come undone during this difficult time,” he said.
“The factors at play have been well reported, and there is nothing that suggests things will improve in the short term, particularly as interest rates and costs remain high.
“Sadly, my predictions of more challenging times this year are coming true, and I don’t expect these to be the last names we hear.
“Governments across Australia need to start listening to the calls from industry as without swift, positive action, the danger is more and more companies will go into administration as the year progresses.”
Grant Thornton Partners issued a statement about the plight of Porter Davis, with customers able to seek further information through the company’s website.
“Notwithstanding the financial support from shareholders and lenders, the group has exhausted options to secure the further funding required to allow Porter Davis to continue to operate viably,” the statement noted.
“The directors were left with no option but to place the companies into liquidation.”
Of the 59 Lloyd Group projects under construction, 29 are in Victoria and 30 in New South Wales.
Deloitte on Friday confirmed they had gone into voluntary administration.
Media quoted Deloitte’s Restructuring Partner and Voluntary Administrator Sam Marsden as saying, “We do appreciate that this news will be unsettling and potentially disruptive for employees and project stakeholders, contractors and suppliers,”
“In these early days, we will be undertaking an urgent assessment of the business’ financial position and project-by-project status, and immediately commence communication with project principals and stakeholders.”
He said administrators would begin an “accelerated sale process”, while speaking with potential parties interested in taking on individual projects.
Consumer groups say that if you bought property from a failed building company, the first step was to stop any payments that might be going to the builder. They should then get in touch with the liquidator.