Bathla Suspensions Point to a “Larger Storm” for Australia’s Construction Industry

For Casey, the dream of leaving the rental market is stuck at the “gyprock stage.” The single mother is one of dozens of Bathla Group customers now waiting to learn whether their homes will be completed after the property developer entered voluntary administration.

Casey said she first learned about Bathla’s financial problems through a post on the company’s social media page. Communication since then has been “very minimal,” she said. “I've just been beside myself. This is where we were going to get out of renting.”

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I've just been beside myself. This is where we were going to get out of renting.

Bathla has stood down approximately 213 of its 350 employees and is seeking more emergency funding. Its administrators say the group needs additional financial commitments to survive beyond the next fortnight. Of Bathla’s 45 active projects, it remains unclear how many will continue under the short-term funding lifeline announced on Monday.

Administrator Teneo confirmed that construction would continue on projects commissioned by Bathla’s five lenders. But customers whose projects do not fall into that group are still waiting for decisions about their builds.

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Anything that is 80 per cent complete and above they'll be working out the commerciality to see if they can complete those builds.

Chris Baskerville, a partner at insolvency firm Jirsch Sutherland, said Bathla and its administrators were likely assessing whether projects could be completed if further funding arrived. Projects that are at least 80 percent complete may be commercially viable to finish, he said, while a half-built property or construction site has almost no value.

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A half-built property or construction site almost has virtually no value.

Baskerville called Bathla the largest Australian construction company he had seen collapse in more than 20 years. He said the company’s failure reflected several pressures, including distress in real estate, fewer new-build and mortgage applications, and rising credit costs. Some companies have enough financial reserves to meet their obligations, he said, while others operate on “razor-thin margins.”

The crisis has also renewed calls for mandatory independent ratings for builders. Equifax Australia says nine in 10 Australians believe customers should have access to a register of independently rated builders. Its iCIRT tool lists companies judged trustworthy after an independent review, but participation is not mandatory.

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It's a highlight of a larger storm that I think is coming.