Bensons Property Group - Case Update

The voluntary administrators of Bensons Property Group are recommending that creditors vote in favour of a DOCA proposed by SMK Enterprises at a meeting scheduled for tomorrow morning.

The company, a major Australian property developer, entered voluntary administration on 27 December. Craig Shepard and Sebastian Hams of KordaMentha were appointed voluntary administrators, while Keith Crawford and Matthew Caddy of McGrathNicol were appointed receivers and managers to oversee the ongoing operation of the business by secured creditor Banner Capital Management.

At the time, Bensons assured the public that there are no plans for redundancies and that it intended to continue trading and working on the homes in its pipeline. The administrators have now confirmed that all 25 employees have continued to remain employed by the company during the administration, receiving salary and wage payments from the receivers in the ordinary course of business. The receivers have continued operating the company on an uninterrupted basis under funding provided by Banner to preserve value so that a DOCA could be proposed.

Following their appointment, the receivers learned that a DOCA proposal would be submitted by SMK Enterprises, a related entity to Elias Jreissati, one of the company’s directors. As the receivers expected that the SMK DOCA proposal would be acceptable to Banner and other key stakeholders, they chose not to exercise their power of sale to conduct a sale campaign. The administrators acknowledged this position, but were of the view that other parties should be provided with the opportunity to submit an alternate DOCA proposal, so they conducted an urgent expression of interest campaign. Ultimately, no other offers were received.

The SMK DOCA, which includes a $16.6 cash component, aims to maximise the chances of the company continuing in existence and completing construction on hundreds of homes and other projects. To achieve this purpose, the DOCA proposal distinguishes between creditors within the same class. Specifically, critical suppliers, employees and certain other creditors with claims totalling approximately $413 million will not be compromised under the DOCA, while other creditors, including various funds, noteholders and non-critical suppliers, will have their claims compromised. SMK has explained that this places the company in the best position to continue in existence.

Interestingly, the administrators have formed the preliminary view that Bensons may have been insolvent as early as 1 July 2023 and as late as 30 June 2024. However, as the directors entered safe harbour in July 2023, they have indicated they will be relying on the safe harbour provisions in any insolvent trading claim.

Read the administrators’ report here.