Gold Coast property developer Resort Corp will meet with creditors to work out a plan to rescue the company after being placed in voluntary administration.
The company, which is owned and run by Paul Brinsmead and Peter Madrers, was placed in voluntary administration after failing to secure funding to continue trading.
Lawyer Andrew Robinson, who is representing the directors of Resort Corp, says the company has been struck by the credit squeeze that is lashing the commercial property sector.
“They’ve built a lot of stuff that they can’t sell at the moment. Even if they are balance-sheet and asset positive, they can’t pay their phone bills. Under Australian law they have no choice but to go into voluntary administration.”
Creditors are owed around $300 million, but that is covered by assets on the company’s balance sheet, according to valuations made over the past 12 to 18 months.
But Robinson admits those valuations may have changed dramatically since the downturn hit.
“The issue is, if you’ve got a commercial property with a valuation dated August last year with $10 million, can you actually sell it for $10 million in this market?”
But the directors, who Robinson says have been “personally cleaned out” after pumping $6 million to $9 million into the company in the past 15 months, are keen to keep the business running.
“The whole reason for appointing a voluntary administration is for a trade out. They will be putting a proposal to the administrator based on staying in until they do realise the projects.”
Robinson says the directors are hoping creditors will “draw breath” before putting in liquidators and receivers, as this could lead to a fire sale of assets.
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