Probuild creditors set to vote on compensation deal

Probuild creditors who are owed millions of dollars from the collapse of the construction business have been sent a proposal that the administrator believes could deliver them a substantially better outcome than a formal liquidation process.

Under a proposed Deed of Company Arrangement (DOCA), from the administrator Deloitte, employee entitlements are to be paid in full and earlier, than what would happen in a liquidation scenario and the average return to small creditors (under $25,000) could be between 50 per cent and up to 71 per cent.

Furthermore, distributions to unsecured creditors could be between an estimated $9.4 million and $45.1 million.

Probuild’s South African parent pulled financial support from its Australian business on February 24 leaving 2300 creditors and 786 employees with an uncertain future.

In late February, Deloitte Turnaround & Restructuring partners Sal Algeri, Jason Tracy, Matt Donnelly and David Orr were appointed joint administrators of 18 entities in the WBHO Australia Group.

On Deloitte’s appointment, the partners started an urgent sale process that resulted in the engineering firm SRG Global paying $15.2 million to take over Probuild’s West Australian arm, while the Sydney-based Roberts Co agreed to acquire five of the Victorian assets of the collapsed company.

The deal comes as the construction sector is facing strong headwinds due to rising interest rates, supply chain issues, cost blowouts and labour shortages.

Probuild is just one of many groups that have collapsed or a teetering on the edge. Others that specialise in home constructions that have become insolvent include ABD Group, Privium Home, BA Murphy, Condev, Next Construction and Pivotal.

Probuild creditors will have the opportunity to vote at a second, virtual meeting next Thursday, June 30, to either return the company to the directors’ control, accept the DOCA, or put the companies into liquidation.