The construction arm of St Hilliers has exited voluntary administration and has been returned to the control of founding company director Tim Casey following creditors voting in favour of a deed of company arrangement (DOCA).
The DOCA will take effect in the next few weeks and was an alternative option to placing the company in liquidation.
St Hilliers Construction was placed in voluntary administration in May – among a number of high-profile builders and construction groups that have run into financial trouble in the last 12 months including Reed Construction and Kell & Rigby.
Trent Hancock and Michael Hird of Moore Stephens Sydney Corporate Recovery Group have been managing the business since their appointment as voluntary administrators in mid-May.
St Hilliers ran into trouble over its involvement in the $350 million expansion of the Ararat Prison in central Victoria.
An associated company, St Hilliers Ararat Pty Ltd, was placed into liquidation in May.
Under the deed of company arrangement a fund of up to $8.1 million will be created and used to pay all former employee their salaries and entitlements in full.
Whatever remains will be used pay to ordinary unsecured creditors, and it is estimated that between $1 million and $4.5 million will remain from the fund for this purpose.
Contractors are expected to make claims of between $10 and $20 million, while St Hilliers is also expected to face legal claims of $30 million relating to already completed projects, according to The Australian Financial Review.
Commenting on the decision, St Hilliers Group executive chairman Tim Casey said he was pleased with decision which would “keep people in work, it will keep projects going and it will put the Company in a position to rebuild”.
The construction arm of St Hilliers employed about 300 people when it collapsed with the St Hilliers group generated annual turnover of around $700 million.
Had the creditors voted to liquidate the construction business, insurance bond providers would have a $45 million exposure.
St Hilliers has continued to trade since being placed in administration with many of its projects operational again protecting insurance providers from making payments to the builder for non-performance by contractors.
St Hilliers projects have resumed in the ACT, Queensland, Victoria and NSW.
This article first appeared on Property Observer.