Porter Davis liquidators focus on 'getting customers in homes as quickly as possible'

In a virtual customer call that reached capacity with 500 participants this morning, in which hosting a Q&A afterwards was "just not feasible" in the view of joint liquidator Said Jahani of Grant Thornton Australia, customers were told they would likely receive clarity about whether a sale would take place in a week's time.

"We expect that in the next week we’ll be able to provide some clarity to customers around the outcome of that sales process, and whether in fact any of these parties are willing to take over, will step into Porter Davis’ shoes, and help finish the build of your home, and if so on what terms and conditions," he said.

With the exception of Englehart Homes, the remaining 14 companies that form part of PDH Group are under liquidation with 1,700 homes under construction and a further 770 contracts where works are yet to start.

Due to the group's limited funding available, Jahani said works had to cease on all sites on Friday and 400 staff were made redundant.

"We have kept a skeleton crew of roughly about 50 to 60 staff on board, and they are helping us to see whether or not we can preserve and maximise the value of the assets, as well as help us deal with trying to get as many customers in homes as possible," Jahani said.

The liquidator said there were an estimated 240 homes that were very close to being ready for customers to move in. With regards to these cases and how they would be approached, Jahani raised a hypothetical scenario whereby the final instalment owed is $20,000 but there were just $5,000 worth of smaller jobs needed to secure a certificate of occupancy.

"Our focus here really is to get the customer into their own home as quickly as possible, in circumstances where we don't actually have the tools or the capacity or the workforce anymore, to be able to undertake that $5,000 worth of work," he said.

In the two markets where Porter Davis operates there are state-backed warranty insurance schemes in place, administered by the Victorian Managed Insurance Authority (VMIA) and the Queensland Building and Construction Commission (QBCC).

Both are currently engaged with the liquidators to find a solution, although Jahani noted a particular practice at Porter Davis that would need to be addressed through an "alternative solution".

"What we have become aware of is that there was usually a timing lag or timing gap between the deposit being paid by the customer and a contract being signed through to the permit then being obtained to allow work to commence," Jahani said.

"That gap between deposit being paid and permit for the DA (development application) for the works to be obtained could sometimes be weeks, it could sometimes be months.

"The practice of of Porter Davis was that once the permits had been obtained so that work could then begin, at that point the insurance policy would be purchased, and so there are a number of customers who have fallen into that gap between paying deposits and work not yet starting on their site because they're awaiting permits, who may not have insurance cover."

He explained that any deposits that have been paid have gone into the working capital of the business, and therefore it would not be possible for those deposits to be refunded. This is where an insurer would need to cover the customer's losses if they are eligible.

Jahani said a number of customers had reached out to the liquidators about what happens with funds that have been paid into a trust account with a solicitor.

"The circumstances surrounding those customers is very different to the general thrust of the of the order book," he said.

"If the funds are in a citizens trust account, we're examining whether or not they can be returned, or alternatively if they’re there, to secure the final payment and we're close to being able to deliver the house, subject to the example I just gave before, whether we can make an arrangement with the customer in that regard."

In a statement given to Business News Australia, the VMIA said it had received 800 claims and expected more to come in over the coming days.

"We understand this is a difficult time for all those impacted by the collapse of Porter Davis Homes," the VMIA said.

"Our immediate focus is to support affected homeowners with VMIA domestic building insurance. We are still working with the liquidator to confirm the exact number of impacted homeowners. To date, we understand there are approximately 1,500 Porter Davis Homes projects underway in Victoria with VMIA domestic building insurance.

"Builders in Victoria are required to purchase domestic building insurance on behalf of the homeowner for all domestic building projects over $16,000. VMIA is not the only provider of domestic building insurance in the State, and homeowners who do not have a certificate of insurance with VMIA are encouraged to speak to the liquidator."