The four Deloitte partners charged with shepherding the Probuild Group Deed of Company Arrangement (DoCA) to effectuation had some unpleasant news for creditors last week.
In a circular dated June 1, lead deed administrator David Orr advised that one creditor – Destination Brisbane Consortium (DBC) – had filed an application in the Supreme Court of Queensland on March 31 seeking to amend the DoCA.
The filing of the amendment application followed correspondence from DBC’s lawyers to Orr and fellow deed administrators (DAs) Sal Algeri, Jason Tracey and Matt Donnelly on March 17.
That correspondence stated that if the Probuild Group DoCA were to effectuate, it would extinguish a historic claim DBC has against Probuild Construction (Queensland) Pty Ltd (PCQ) in respect of work on the Queens Wharf Development in Brisbane in 2020.
In the circular to creditors Orr confirmed that PCQ is named in an insurance policy that may indemnify PCQ partially or in full in respect of the DBC claim, but DBC claims the proceeds of that insurance will be put out of its reach if the DoCA is allowed to effectuate in its current form and nor is the threat of extinguishment DBC’s only beef.
It also complained that it was not made aware of the second meeting of creditors held on June 30, 2022, otherwise it would have made the DAs aware of its concerns at the meeting.
To this end DBC has also alleged in its amendment application that the Deloitte foursome failed to properly convene the second meeting creditors by failing to give DBC notice and failed to adequately investigate the Probuild Group’s affairs “because they failed to make any or any adequate enquiries about the nature and quantum of DBC’s claims against Probuild Construction Australia (PCA) and how those claims may impact the return to creditors under a deed of company arrangement or under liquidation”.
In the circular Orr was careful to note that DBC has not submitted a proof of debt and therefore would not have been entitled to vote at the second meeting, though that is not the same thing as attending the meeting and bringing concerns about a DoCA to an administrator’s attention.
The DBC comprises lead partner, The Star Entertainment Group, and two Hong-Kong based partners, Chow Tai Fook Enterprises and Far East Consortium.
It was chosen by the Queensland Government to revitalise Brisbane’s Queen’s Wharf precinct in 2015.
According to Orr, the DAs provided assurances to DBC that insured creditor claims would not be extinguished in the event off the DoCA’s effectuation but these were insufficient to persuade DBC and the parties are now in litigation.
Interestingly, in bringing the DBC intervention to creditors’ attention, the DAs also used the opportunity to slip in the news that on April 27, they filed an application in the High Court of Australia seeking leave to appeal and appealing the decision of the NSW Court of Appeal in Allianz Australia Insurance Ltd v Probuild Constructions (Aust) Pty Ltd  NSWCA 56 (Allianz Appeal).
“Given the Allianz Appeal may realise significant assets for the benefit of all creditors, the deed administrators will not effectuate the DOCA until the Allianz Appeal is finally determined, which may be at least 12 months’ away,” Orr said.
The decision on Allianz’s successful appeal was delivered on March 30, the day before DBC filed its originating application seeking to amend the DoCA.
Despite the delay brought on by the Allianz Appeal DBC is wasting no time, with the DoCA amendment application scheduled to be heard on Friday June 16.