Australian regulator warns private credit firms of more enforcement after Bathla insolvency

AUSTRALIA’s corporate watchdog has put the private credit industry on notice to expect more enforcement action in one of its sternest rebukes over poor practices, following the insolvency of Sydney developer Bathla Group.

The sector needs to improve its standards across the board, said Simone Constant, a commissioner for the Australian Securities and Investments Commission (Asic), in a speech to be delivered on Tuesday (Sep 22).

She said multiple enforcement investigations are underway and the regulator is undertaking active surveillances across wholesale and retail funds, where it is already clear that practices have fallen short. 

“We’re now beyond warnings,” Constant is set to say. “The sector should prepare for enforcement action.” 

The actions that parties need to take include fund managers reviewing loan portfolios and applying realistic independent valuations, and superannuation trustees doing thorough due diligence before committing member capital, according to Constant’s speech.

Valuers, auditors and rating agencies also need to ensure valuations reflect reality and risks are recognised early, she would add.  

Her planned comments follow a heightened focus in recent years on the country’s A$200 billion (US$143 billion) private credit market, where the bulk of the lending has gone to real estate.

Earlier in 2026, Asic boosted supervision of the private credit industry by requesting detailed data from funds on a weekly basis for a six-week period, and it later said it was investigating a number of private credit funds to ensure valuations were realistic.

“We’ve been talking about private credit for a long time now – specifically about the risks stemming from inconsistent industry standards that haven’t kept pace with the growth, significance, complexity and connections of the sector,” Constant is set to say.

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A second tranche of surveillance is due “very soon” to gain insights into overseas redemptions and valuation changes on local funds, she would say. 

Earlier in September, after Bathla appointed a voluntary administrator as it struggled to pay its debts, Constant highlighted the lack of even basic data for the market during a parliamentary hearing.

In her speech on Tuesday, Constant would note Bathla’s complex structure where its A$3.4 billion in debt from 40 lenders was funnelled through around 542 special purpose vehicles. 

“The collapse of Bathla reinforces why strong governance, effective oversight, clear disclosure and accurate valuations are critical,” she is set to say at a property conference in Sydney. BLOOMBERG