A collapsed development giant, which collapsed with about 130 unsold apartments in Melbourne, has left behind a staggering $200 million in debt, liquidators say.
The company, called Caydon, which was backed by prominent figures in Asia, went into administration at the end of July.
Despite having a portfolio of projects worth $4 billion at one stage, according to the liquidator, the failed development company is now left with millions in debt.
It blamed Covid lockdowns and price factors for its demise and owed an estimated $200 million to its financier OCP Asia and $285,000 to Mercedes-Benz for a luxury wagon, a report to the creditor showed .
He also had an outstanding tax bill of about $7.5 million and had not filed any tax returns in 2020 or 2021, according to the report, while 23 employees were also owed money, including an employee who claimed they were out of pocket for $21,000.
Although the developer made a pre-tax profit of $3.7 billion in the year to June, it was unable to meet immediate debts and liabilities that exceeded its assets almost three times, it revealed creditor’s report.
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At the time of its collapse in July, Caydon CEO Joe Russo said it had delivered 3,000 apartments, hotels and offices since it started but had faced a 45% increase in costs of construction during the last year.
“Unfortunately, over the past few years, Caydon has had to deal with one difficult market situation after another,” he said.
“The pressure on construction costs that has led to builder insolvencies and supply chain disruptions, and now interest rate pressures and negative house price sentiment, have put additional pressure on our operations”.
Claims of $15.6 million
Among Caydon’s assets were around 130 unsold apartments at his Home development in the affluent suburb of Alphington, which ranged in price from just under $600,000 to nearly $700,000.
There was also “a significant land bank in the Melbourne suburb of Cremorne, where Caydon was developing a $1 billion commercial precinct on the site of the former Nylex silos”, he said. The Australian.
The creditor’s report described 43 unsecured creditors, who were owed $15.6 million by the bankrupt developer.
This included $535,000 owed to law firm King & Wood Mallesons, $281,000 to real estate agency Knight Frank Australia, $124,000 to Deloitte Private and $44,000 to Google.
Projects dried up
Other Australian developers have faced difficulties in recent times, scrapping projects and blaming skyrocketing construction costs and labor shortages.
Perth developer Sirona Urban killed a $165 million luxury tower where more than 50% of apartments had been bought off the plan, which was set in one of the state’s tallest apartment buildings .
Sirona Urban owner Matthew McNeilly said in July that construction costs had risen by 30% in the past 10 months, while a shortage of retail was also causing problems.
In the same month, Melbourne developer Central Equity abandoned plans to build a $500 million apartment tower on the Gold Coast, blaming the construction industry crisis and rising construction costs for making the project was not profitable.
Earlier this month, developer Cedar Woods shelved a $180 million development in Brisbane that was due to deliver 250 homes, blaming rising costs, labor shortages, rain events significant in Queensland and extended construction timelines.
One homeowner described the development company’s decision as an “absolute joke” claiming it would leave his family financially “ruined”.
Construction crisis
It comes as the construction industry faces a crisis with a series of collapses this year.
The latest was Queensland residential builder Oracle Building Corporation Pty Ltd, which went into liquidation on Wednesday, leaving 70 employees and 200 suppliers and subcontractors out of business, as well as 300 homes that were in the process of being completed.
The crisis has been caused by a perfect storm of supply chain disruptions, skilled labor shortages, skyrocketing material and logistics costs, and extreme weather events.
Another Queensland builder, Besse Construction, collapsed last week owing $1.7 million.
Earlier this year, two major Australian construction companies, Gold Coast-based Condev and industry giant Probuild, went into liquidation.
In July, the Supreme Court ordered the liquidation of Snowdon Developments with 52 staff, 550 households and more than 250 creditors with just under $18 million, despite being partially bought less than 24 hours after bankruptcy .
Others also joined the list, including Inside Out Construction, Solido Builders, Waterford Homes, Affordable Modular Homes and State Builders.
Then there was NSW construction company Willoughby Homes, which went into voluntary administration last week, leaving at least 30 homes in limbo.
Also closed was Geelong-based Norris Construction Group, which collapsed in March with $27 million in debt. It owes about 140 employees $3.2 million that it is unlikely to be able to pay, according to the liquidator’s report.
Also, Melbourne-based firm Blint Builders collapsed with about $1 million in outstanding debt to 50 creditors, according to liquidators.
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