Black Friday: Porter Davis, Lloyd Group in Crisis

It became Black Friday on March 31, 2023 with the collapse of one major Australian construction company while a second big builder called in administrators. 

The day began with news Australia’s 13th biggest builder, Porter Davis Home Group, was being liquidated—just hours later it was revealed civil construction firm Lloyd Group had entered administration.

The Porter Davis collapse has left more than 1700 unfinished contracts including homes on estates developed by some of the biggest players in the sector.

It is understood the builder had work under way on estates in Victoria and Queensland owned by Lendlease, Stockland, Frasers Property Australia, Aveo, Peet, Core Projects and National Pacific Property, among others.

Work has ceased on all PDHG sites after the group was placed in the hands of liquidators Grant Thornton Australia on March 31.

▲ Work has ceased in PDHG sites across Victoria and Queensland.

Estates where PDHG had builds under way are believed to have included Lendlease’s Aurora in Wollert, Stockland’s Highlands, Cragieburn; Cloverton, Kalkallo; and Grandview, Truganina; and Fraser Property Australia’s Five Farms in Clyde North.

There are also 779 signed contracts with customers where work was yet to begin. 

PDHG had around 470 employees and was forecasting revenue of $555 million for the 2023 financial year.

Said Jahani, Matt Byrnes and Cameron Crichton were appointed liquidators of the 14 companies in the group.

“The liquidators’ appointment is over all PDH Group operating and employing companies in Victoria and Queensland, except Englehart Homes,” a Grant Thornton Australia spokesperson said.

“Englehart Homes, which was acquired by the group in late 2021, is not subject to the appointment and is continuing to operate in its own right.”

The liquidators will not be trading the PDH Group companies and works on current builds will cease immediately.

“However, the liquidators are working urgently to determine if a solution can be found to support customers and some employees, including by engaging with key stakeholders and potential interested parties who may be willing to take over the current customer contracts.”

The liquidators said investigations will continue into the reasons for the collapse but that “the extremely challenging environment for residential home building has directly contributed to the group’s financial position, with rising input costs, supply chain delays, labour shortages, and a drop in demand for new homes in 2023 impacting the group’s liquidity”.

▲ It seems clear the cause of the group’s collapse can be laid at the feet of the current construction crisis.

“Notwithstanding the financial support from shareholders and lenders, the group has exhausted options to secure the further funding required to allow Porter Davis to continue to operate viably, and the directors were left with no option but to place the companies into liquidation,” the spokesperson said. 

Lloyd Group enters administration

Meanwhile, Port Melbourne-based builder Lloyd Group announced it too had fallen victim to the construction crisis and was going into administration.

It is understood the firm has about 200 employees and specialises in government infrastructure projects, primarily in Victoria and NSW.

Deloitte Turnaround & Restructuring partners Sam Marsden, Sal Algeri, Jason Tracy and Tim Norman were appointed voluntary administrators by the directors of Lloyd Group, effective March 31.

A Deloitte spokesperson said the appointment affected 59 projects under construction—29 in Victoria and 30 in NSW.

The Lloyd Group, which comprises six companies, will now be put up for sale by the administrators. Details of the company’s debt position has not been revealed.

“Like others in the construction sector, and despite significant effort, Lloyd Group has been unable to overcome increasingly challenging circumstances over recent months that have eroded project margins, culminating in our appointment today,’’ Deloitte’s Sam Marsed said.

▲ The Lloyd Group’s Beaconhills College Community Arts and Recreation Centre.

“We appreciate that this news will be unsettling and potentially disruptive for employees and project stakeholders, contractors, and suppliers.

“In these early days, we will be undertaking an urgent assessment of the business’s financial position and project-by-project status, and immediately commence communication with project principals and stakeholders.

“We will also immediately commence an accelerated sale process and hold discussions with parties that might be interested in taking on individual projects.’’

The group’s website says the firm was “established in 1979 by Trevor Lloyd as a small family-owned contracting business in the south-eastern suburbs of Melbourne”.

“The business has steadily evolved into a pre-eminent construction group with offices in Melbourne, Sydney, Brisbane and Geelong.”

The construction industry has had a horrendous 2023 so far: PBS withdrew from sites on March 6, which came after Sydney builder EQ Projects, Queensland housebuilder LDC, and Delco Building Group in Victoria, among others, went under.