Bathla rescue falters as lenders begin appointing receivers

Efforts to preserve Bathla Group as a going concern are rapidly losing momentum, with administrators Teneo warning that the Western Sydney developer is running out of cash while secured lenders have begun appointing receivers over individual projects.

Since Stephen Longley, Rebecca Gill, Daniel Walley, Adam Colley and Andy Scott of Teneo were appointed voluntary administrators on 25 August, the firm's immediate focus has been securing emergency funding to maintain Bathla's operations and continue construction. The administrators initially sought approximately $20 million to fund the business for about five weeks, but attempts to assemble a coordinated lender rescue have so far fallen short. Teneo has said the group has no available cash to pay wages or suppliers, and has advanced approximately $1 million of its own funds to cover basic operating expenses including vehicle registrations and fuel.

The administrators had identified approximately 45 construction projects that could potentially continue if funding were secured, representing around 2,000 homes, but by 1 September Longley said hopes for a holistic solution were fading following unsuccessful discussions with lenders. Some of the group's approximately 350 employees have gone unpaid for weeks, while others have been stood down, and the administrators are preparing for a wind-down if sufficient funding cannot be obtained. As of 2 September, lenders had been given another 24 hours to agree on a rescue package.

At the same time, the secured creditor group has begun to fragment. Woodbridge Capital has appointed FTI Consulting as receivers over 65 completed properties held as residual stock at a Bathla townhouse development in Kellyville, with the receivers tasked with realising the properties for the lender. Other lenders have also moved against individual Bathla assets, and Longley said receivers had been appointed over between four and six sites. Reports indicate Ray White Capital, which has approximately $200 million of exposure to Bathla through subsidiaries, has taken control of two sites, while other lenders are considering similar measures.

The appointments threaten to undermine Teneo's attempt to coordinate a group-wide restructuring. As lenders enforce against separately secured assets, control of projects and their underlying value moves outside the administrators' hands, increasing the prospect that Bathla's portfolio will be broken up rather than restructured as a single business. The group has approximately 200 development projects, including the 45 projects currently under construction, while reports place its borrowings at more than $3 billion.

There are signs that individual projects may nevertheless continue outside a Bathla-wide rescue. PAG, one of the group's largest lenders, has committed to continue funding contractors at a 312-apartment development in Pemulwuy, illustrating how lenders may seek to complete projects where doing so protects the value of their security. The New South Wales government has rejected requests to provide emergency funding to the group, leaving existing financiers as the principal potential source of any short-term lifeline.