Work Begins Again on Handful of Embattled PBS’ Sites
As the tradie apocalypse continues, one company to fall victim has revealed the extent of its liabilities after a creditor meeting last week.
PBS Building, which called in liquidators at RSM Australia at the beginning of March, is now said to owe creditors $40 million.
It was initially thought that PBS went into insolvency owing $25 million.
At a meeting on Friday, 180 creditors of the company heard updates from RSM Australia partners Jonathon Colbran, Richard Stone and Mitchell Herrett, who took control of the company following its administration.
They were told work had recommenced at seven of the 24 current PBS project sites that were in active construction after PBS withdrew quietly from its portfolio of projects over a weekend.
This includes five of the eight active projects in NSW, one of the 11 ACT sites and one of the five active Queensland sites.
Administrators said that 17 other projects were also “advancing towards a resolution”.
Fifty-six other projects which had been contracted to PBS companies were completed and are now in a defect liability period.
PBS Building directors said that the administration was “gut-wrenching” and as a result of a “perfect storm” of fixed price contracts, record material costs, supply chain challenges, labour shortages and extreme weather events forced the administration.
PBS made 180 employees redundant and paid out their entitlements in full before administrators were appointed.
“To date 374 claims have been lodged by creditors—177 in the ACT, 131 in NSW and 66 in Queensland. This number is also expected to rise and fall until the Administrators are able to verify the claims,’’ RSM partner Jonathon Colbran said.
“[Friday’s] meeting was the first of two that will be held during the administration process with the second being the one where creditors will determine the future of the PBS companies.
“At the second meeting creditors will vote on whether to put the companies into liquidation or enter into a Deed of Company Arrangement (DOCA). A DOCA is a binding agreement between a company and its creditors that sets out how the affairs and assets of the company will be dealt with.’’
A full creditor’s report is set to be published in mid-April, although the administrators warned that due to the complexity of the case, timeframes could blow out.
The report will also detail RSM’s investigations into project trust accounts in Queensland and NSW.
“These trust accounts were frozen from the date of the appointment of the administrators. We are now identifying which projects the accounts relate to, which creditors may have rights to the funds in these accounts and then reconciling these funds,’’ Colbran said.
“The Queensland Building and Construction Commission (QBCC) will concurrently undertake a compliance audit of the Queensland project trust accounts.”
Insolvencies are set to rise this year, according to Creditorwatch chief executive Patrick Coghlan, and there are already a host of liquidations in the constructions sector, which has been predicted to face the highest levels of insolvencies it has seen in a decade.
Last week, the Sunshine Coast’s Nation Construction Management was placed in liquidation, owing a reported $3 million at the minimum.
Sydney’s Allworks Building Pty Ltd also called in the liquidators last week, reportedly owing $300,000.
Partner at the liquidators of Allworks O'Brien Palmer, Daniel Frisken, said that compared to others, the liquidation of the company was "fairly orderly".
“There are no unfinished works for this company to complicate the matter,” Frisken told The Urban Developer.
“It does appear that it was rising costs in the industry have priced them out of the market. They were making losses on contracts as a result of those increased costs which is a massive crisis of across the industry, added to continuing increases in insurance premiums and upward pressure on wages.
“The ATOs current approach is to issue director penalty notices, rather than start full enforcement against the companies, but what that means is that before they get sent to court, directors are driven in droves into the offices of insolvency practitioners.
“Construction always rings the bell for the rest of the economy. There are flow on effects to retail, professional services, you name it. Sadly it's a sign of things to come across the whole economy.”
There are a number of construction industry-adjacent companies facing insolvency, including Adelaide Crane Maintenance Pty Ltd, Weldstrong Fabrication Pty Ltd, BGC Master Builders Pty Ltd, and Millennium Electrical Pty Limited, all of which were placed into liquidation during the past seven days.
