Home builder Porter Davis in liquidation, stops all work
One of Victoria’s largest home builders has collapsed, stopping work immediately on 1700 builds in Victoria and Queensland, leaving dozens of subcontractors in limbo and liquidators scrambling to find new firms to take over the group’s contracts.
Porter Davis Homes, which employs 470 staff, appointed Grant Thornton as liquidators on Friday after its search for a white knight buyer fell over on Thursday evening. Staff were told of the appointment at a 9am meeting at the company’s offices on Friday.
Grant Thornton said work would cease immediately on all projects being conducted by Porter Davis’ group of companies in Victoria and Queensland. A small subsidiary of Porter Davis, Melbourne-based Englehart Homes, is not involved in the liquidation and will continue to operate.
Porter Davis has more than 1500 homes in progress in Victoria and a further 200 homes in Queensland. There are also 779 signed contracts with customers where building has yet to commence, Grant Thornton said.
The liquidators advised that customers with contracts could register their claims by directly contacting the Victorian Managed Insurance Authority, in relation to Victorian builds, or the Queensland Building and Construction Commission, in relation to Queensland builds.
Grant Thornton said the liquidators were working urgently to determine if a solution could be found to support customers and some employees, including by engaging with key stakeholders and potential interested parties who may be willing to take over the current customer contracts.
Grant Thornton has kept on 60 staff to help with the onsale of the contracts. The remaining 410 staff were made redundant this morning and finished up work. However, their entitlements are expected to be paid out under the government’s Fair Entitlement Guarantee which applies to companies in liquidation.
Grant Thornton partner and liquidator to Porter Davis group of companies Matt Byrnes said the group had run out of funding after trying to find a buyer.
“We’re already in discussions with a number of parties who might have an interest in stepping in and taking over some of the contracts. I say ‘some’ because I think it’s unlikely there’ll be a particular buyer come in and take the whole of Porter Davis’ builds. They’ve already been through that process,” Byrnes said.
“But there is still a possibility that other builders will be able to take tranches of the builds and take on completely those customers,” he said.
Staff arrived at the Porter Davis head office in Docklands on Friday morning before the meeting. One employee, who has been with the company for eight years and the building industry for 40 years, said the collapse of the company was a sign of the times. “Building is a volatile industry at the moment,” he said. “I’ve never seen it like this.”
Porter Davis’ board said they regretted they could not find a funding solution for the group and acknowledged the group’s employees for their hard work. They added they were hopeful that a solution could be found to support Porter Davis customers in completing their homes.
Grant Thornton said liquidators from the firm would now investigate the reasons for the collapse.
“The extremely challenging environment for residential home building has directly contributed to the PDH Group’s (trading as Porter Davis) financial position, with rising input costs, supply chain delays, labour shortages, and a drop in demand for new homes in 2023 impacting the Group’s liquidity,” Grant Thornton said.
The Commonwealth Bank is the group’s largest secured creditor but the size of Porter Davis’ debt with the bank is unclear. The group’s secured creditors have been taking advice from KPMG. A spokesman for the bank declined to comment, as did KPMG.
Subcontractors working for Porter Davis Homes say they haven’t been paid for work done on the volume builder’s projects.
As this masthead revealed on Friday, well-placed sources not authorised to speak publicly said the builder was looking for a buyer on Thursday night, but was unable to find a last-ditch saviour.
The company operates mainly in Victoria and south-east Queensland. It was ranked the 13th largest home builder in Australia with construction started on 1734 homes in the 2020-21 financial year, according to Housing Industry Association figures.
John Goddard from Subbies United said multiple subcontractors working on Porter Davis projects had not been paid in the past few months, with some not receiving payments since before Christmas.
“Suppliers have stopped their accounts and subbies are not working for them,” Goddard said. “They’re another box builder basketcase.”
Porter Davis’ struggles come as the construction industry faces increasing pressure in the aftermath of the pandemic.
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