A group of creditors from the collapsed Ralan Group have accepted a plan by the stricken apartment developer’s founder William O’Dwyer to launch a deed of company arrangement (DOCA).
Ralan, which was building on the Gold Coast and Sydney, recently collapsed owing funds of $564 million to more than 1,500 secured and non-secured creditors.
The proposed deed of company arrangement would allow victims to deduct the deposits owed to them from the purchase price of new units and back a new scheme to buy more apartments from a separate, unnamed developer with the promise of discounted prices.
Grant Thornton joint administrators Said Jahani, Philip Campbell-Wilson and Graham Killer recommended creditors vote to wind up the company which owed its lenders, bankers, trade creditors and buyers—many of Chinese background, who released their down payments for apartments on the Gold Coast and Sydney.
The majority of creditors voted in favour of liquidation for The Orchid at Arncliffe a 318-apartment residential project in Sydney.
However, the majority of creditors voted in favour of the deed for Ralan Group's Gold Coast companies, which are overseeing its Ruby development.
The rest of the group's 50 companies—mostly inactive—were also in liquidation.
“These companies now have 15 days to sign the Deed of Company Arrangement giving effect to the outcome of today’s vote,” Grant Thornton national managing partner Said Jahani said.
However, for one of the deed's Gold Coast entities, Ralan Paradise No 2 Pty Limited, a split vote meant an intervening vote from administrators.
For this entity: 112 creditors owed $60,307 voted for the deed but 103 creditors owed $87,720 voted against the deed.
“Through our investigation it has become abundantly clear that Ralan has been unable to pay its creditors for some time,” Jahani said.
“By liquidating the majority of companies in the Group, we can attempt to recoup as much as possible for creditors’—based on the potential actions available to a liquidator pursuant to the Corporations Act.”
Grant Thornton noted that creditors of the DOCA would now place the onus on O’Dwyer for him to reveal the identity of the mystery developer.
O'Dwyer has refused to name its third-party developer “Mr X” despite demands from creditors.
Jahani warned that even though a portion of the deed was successfully executed, it would be a long time before buyers would see their money as sites have yet to be procured or planned.
After the signing of the DOCA in 15 days, Ralan's Gold Coast buyers will have their deposits owed deducted from the future purchase prices of new units.