The company was one of NSW’s largest privately owned property developers. Declining property valuations had impacted their stock, leading to hardship and stress. With large debt levels, the bank involved was looking to appoint a receiver, who would then sell the incomplete properties in a fire sale. This would mean that existing losses would become further exaggerated by both costs of the receivership plus reduced prices generated from the rushed sale of incomplete sites to a far smaller pool of potential buyers. The dVT Group were appointed as voluntary administrators to attempt a workout.
The formal administration allowed dVT to crystallise the debts, freeing up some working capital and stopping action from other creditors. The use of a VA and DOCA process also allowed the company to keep trading as long as it had the support of banks and other stakeholders. Under the administration and directorship of dVT, the real position of all major secured creditors was determined as was the extent of potential losses on a forced sale basis and on a refinanced or delayed finance sale basis. It became clear that most creditors were going to lose $ in some way, so dVT worked with them to determine how much they were prepared to lose now as opposed to their willingness to work with the director to try and salvage their position in the future. Properties involved required substantial work to enable completion so they could go to market. Banks therefore had the option of realising the low existing value of these uncompleted sites or supporting the completion of the development where a larger pool of potential buyers would likely generate a higher return and cover the costs.
Many creditors provided additional credit to cover the development costs even though many had already incurred a loss. Suppliers and contractors were on the whole very pragmatic about the events that unfolded, and showed their support of the dVT appointed director by continuing to provide services and goods, on the grounds that they would continue to make profits while the development was being completed, even if some of their debts were written off. The development was completed and sold at the expected market prices so that the majority of creditors were repaid and creditors were substantially better off than if a receivership had occurred. The developer continues to trade successfully today providing a valuable contribution to the NSW economy.