HLB and McGrathNicol working on Dyldam's administration
Development sites of Sydney-based real estate developer Dyldam have entered administration, with HLB Mann Judd and McGrathNicol seated at either side of the table. HLB Mann Judd is managing the administration process while McGrathNicol is protecting creditor interests.
Setting the context: Dyldam’s financial struggles began in early 2019, as reported by the Australian Financial Review (AFR). By May 2020, Dyldam-owned Rainbow Calingford One was in liquidation for tax defaults of nearly $1 million. By November, one of Dyldam’s lenders – Global Galaxy Holdings III – had appointed receivers to manage the sale of a mammoth building site earmarked for over 1,300 apartments.
Since then, over 20 development sites have gone into voluntary administration, under the charge of Sydney-based accounting and advisory firm HLB Mann Judd. Leading the process are Todd Gamel and Barry Taylor, partners in the firm’s Restructuring & Risk Advisory practice.
The pair are currently administrating the companies, and property sites where HLB Mann Judd are joint administrators, with the goal of finding the best possible solution for all involved. Meanwhile, Dyldam’s lenders are also taking steps to ensure their own best interests are protected.
On January 5th, the company’s secured creditors appointed McGrathNicol receivers and managers to handle their side of the negotiations. Partners in McGrathNicol’s Restructuring wing Jonathan Henry, Jason Preston, Barry Kogan and Jason Ireland have taken charge of eight properties under development – cumulatively worth well over $1 billion.
Concentrated in Western Sydney, notable developments include flagship project The Opera – 1,200 apartments together worth over $800 million – and Dover, a $150 million project in Fairfield. According to Receiver Jonathan Henry, an “urgent assessment of assets under control is underway,” and plans are to ensure completion of as many projects as possible.
“Based on our early assessment it appears the Group’s difficulties relate more to its capital structure rather than the quality of sites under development. The assets we are appointed over include a number of high-quality sites, some of which are near completion. Our intention is to finalise development of near-completed sites and provide purchasers with certainty over settlement on existing pre-sale contracts.”
Some residents are already expecting to move in later this year, and it is in creditors’ best interests to see this process through. According to Henry, lenders have made the financial commitment to ensure the developments are brought to fruition.
“The secured creditors who have appointed us intend to support the assets during the receivership process. This support will include the provision of additional funding to ensure the assets can be maintained while options for recapitalisation, development and/or disposal are explored.”
Dire straits
With voluntary administration starting on December 31st , Dyldam joins hundreds of businesses claimed by 2020 and the economic circumstances that ensued. With billions lost in jobs and business incomes, few were in a position to spend in the consumer economy or on real estate. Other big names to fall prey include Virgin Australia, T.M. Lewin and fashion retailer Tuchuzy –· for which the administration process is also being managed by McGrathNicol Restructuring.
