Insolvent Bathla faces 24-hour deadline for creditor deal: source

[SYDNEY] Insolvent Australian property developer Bathla Group faces a 24-hour timeframe for talks with its creditors to secure short-term funding, according to a person familiar with the matter, in its last-ditch effort to avert collapse.

Bathla is a major residential property developer in Sydney and owes around A$3.3 billion (US$2.4 billion) to its creditors. In August, the firm appointed an administrator after struggling to pay its debts in the face of a slowdown in Australia’s property market and higher construction costs.

The administrator is actively engaged in talks to secure a short-term funding package that would enable the business to remain operational, said the person who asked not to be identified discussing a private matter. Bathla requires the funding to help complete the 45 projects currently under construction, the person added.

The administrator said that it needs a further 24 hours to conclude the negotiations, according to the person. The administrator, Teneo Australia, has previously said that it needed to secure around A$20 million by Thursday to cover staff payroll.

Bathla’s insolvency has spurred concern over Australia’s private credit market and raised fears that more indebted builders could run into trouble. Local developers rely heavily on private credit and comprise about half of the country’s A$200 billion industry.

The situation attracted the attention of Australian Treasurer Jim Chalmers, who noted Bathla’s “complex financial arrangements”, when faced with questions on the company at a press conference on Wednesday (Sep 2). “It’s a major developer, it’s got a really fragmented business model.”

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“We’re monitoring the situation very closely,” Chalmers added, through contact with the Australian Securities and Investments Commission (ASIC). “There’s important work that ASIC is doing so we’re engaging with ASIC and any other regulators about these developments.” BLOOMBERG