Bathla Group staff will go unpaid on Thursday if lenders cannot agree to a rescue plan for the beleaguered property developer, administrators have warned.
Speaking on Monday morning at Bathla’s Girraween headquarters in Sydney’s west, Teneo administrators warned the company was at a dire financial impasse.
Teneo senior managing director Stephen Longley said the crisis was so bad that the restructuring firm had used $1m of its own money to pay for registration renewals on Bathla company vehicles.
“There’s no cash here,” Mr Longley said. “We don’t have any cash to pay wages. We don’t have any cash to pay suppliers. So unless there’s a situation that can be resolved, we won’t have any other option than to close the business.”
Teneo administrators were appointed to Bathla last week, with the developer buckling under the strain of $3.6bn in private credit debts, as well $823m in other debts owed to suppliers and by its projects.
The developer, the biggest builder of affordable housing in NSW, risks collapsing in a conflagration for the Sydney housing market and the private credit market.
Mr Longley said no more staff had been stood down on Monday, after a handful were told on Friday they were no longer required.
He said remaining staff were needed to ensure some of Bathla’s 45 construction projects could come to completion.
Bathla has almost 200 projects under way.
Mr Longley said some of the projects would be completed in the next few weeks, if work continued, while others could be done by March next year.
He said finishing those homes would help towards delivering funding for the developer.
Staff were called to Bathla’s office on Monday to hear the news of a potential rescue tilt.
Many could be seen embracing as they left its sprawling office and manufacturing site.
However, administrators reported Bathla boss Bhart Bhushan was not present.
Work continued at the Girraween headquarters, where Bathla makes a number of key inputs for its homes.
Mr Longley said while some debt facilities with Bathla’s lenders were not fully drawn, enabling some work to continue on sites, there was no cash to fund the operations of its head office and the nearly 350 staff working for the developer.
He said while there was $3bn in debt, the actual projects were worth almost $5bn.
But Mr Longley cautioned if those all came to market at once it would cause a price crash.
“Equity might disappear if we don’t get this back up and running,” he said.
Lenders are set to meet on Monday night to discuss a rescue plan for Bathla. Some have already taken charge of Bathla sites, with receivers appointed over four sites, with plans for more to come.
Creditors may vote to put the company into liquidation at a meeting on Friday, should a rescue deal not arrive.
The administrators have also sought to woo lenders to back a $20m rescue plan to take operations through to October. About $40m is needed to make it through to Christmas and already Bathla owes its staff about $2.5m in unpaid wages.
Mr Longley said Bathla’s legion of subcontractors, many of whom are unpaid, would also be “looked after in time” if the developer could restart operations.
Teneo had attempted to tap the Minns government for financial support for Bathla, but this was rejected on Friday.
Mr Longley said the “quick no” from the Minns government was “actually better than taking time to make a decision”.
As revealed in The Australian on Monday that questions were also hanging over how Bathla used deposit money from customers.
Mr Longley said Teneo was investigating the deposits, noting there were “maybe a thousand” spread across half a dozen law firms.
“Some of the contracts also allow deposits to be used by the business, so deposits have been used,” he said.
“We don’t have the cash to do that work to work out that reconciliation.”
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