Creditors caught up in the high-profile collapse of Ralan Group will move to rescind a plan by the apartment developer’s founder William O’Dwyer to launch a deed of company arrangement.
At the second creditors' meeting held at the Wesley Conference Centre in Sydney on Monday, nearly 700 attendees gathered in order to understand what was to become of nearly $540 million owed.
The developer, which was building on the Gold Coast and Sydney, collapsed at the end of July owing funds to more than 1,500 secured and non-secured creditors
After an extensive investigation by voluntary administrator Grant Thornton, Ralan Group was found to have been insolvent since 2014 altering its records in the lead-up to its collapse.
In an attempt to avoid bankruptcy, O'Dwyer proposed forming a deed of company arrangement over several Ralan companies.
O'Dwyer's scheme would allow victims to deduct the deposits owed to them from the purchase price of new units.
Many of the creditors were sceptical about the proposal last week, questioning why O'Dwyer had to be involved.
These questions continued at the creditors' meeting where furious creditors proceeded to shout and swear during O'Dwyers brief appearance.
The frustration was palpable with more than 90 per cent of apartment purchasers selecting to release their deposits to Ralan Group in exchange for earning 15-20 per cent interest on their deposit.
In some instances, purchasers had no intention of buying an apartment but enjoyed the high return, rescinding their contract for an apartment purchase before settlement.
Other purchasers paid unsecured deposits of more than 10 per cent on their apartments to enjoy the high returns.
Administrators Said Jahani, Phil Campbell-Wilson and Graham Killer from Grant Thornton were appointed to Ralan Group and more than 50 of its subsidiaries.
“We’re close to having a resolution on the future of the Group and creditors are understandably very keen to understand what their options are,” Grant Thornton administrator and national managing partner Said Jahani said.
“Question time is always the most intense part of any creditors’ meeting and whilst it can be very emotional we need to understand the difficult circumstances a lot of these families now find themselves in.
In the lead up to the creditor's meeting O'Dwyer hosted a series of meetings in Sydney's Chatswood to implore creditors to stick together in order to get back their money through proposed DOCA.
Grant Thornton's said unsecured apartment buyers would not recover any of their released deposits that Ralan Group used to run an already insolvent company and recommended liquidation over the DOCA.
“We do not support it because it is highly uncertain and conditional,” Jahani said.
“Based on our extensive investigation we believe that liquidation is the correct path forward and will provide the best outcome for all parties.
“However, we anticipate a close vote which is why we have engaged an external third party to independently count and verify the votes.”
Creditors were asked to complete and return their voting documentation provided by the external third party, Link Market Services, when they signed into the meeting.
These forms have a unique barcode to ensure creditors’ votes are properly counted and there is no risk of double counting votes.
Creditors will now reconvene the adjourned meetings next Tuesday to announce the result of the poll.