Collapsed building firm lost almost $15m on luxury build
LOSSES of almost $15 million due to underquoting and "poor management" on a luxury apartment project and recorded losses of almost $20 million in two years preceded the collapse of a major Coast building firm.
An FTI Consulting report to creditors issued in early-June outlined the scale of losses RGD Group Pty Ltd and RGD Constructions Pty Ltd suffered in the lead-up to their collapse in May.
The report stated about $13.5 million - $14.5 million had been lost by RGD Constructions Pty Ltd due to a range of issues on the Virtuoso project, a premium, riverfront apartment development by Stockwell in Brisbane's West End.
FTI Consulting investigators also found "comprehensive losses" of about $10 million and $9.3 million had been recorded by RGD Constructions in the 2019 and 2020 financial years.
The report, which recommended the companies be wound up, was handed to creditors last week, before FTI Consulting's John Park and Kelly-Anne Trenfield were formally appointed liquidators of both companies on June 12.
The companies had been directed by Ron Grabbe.
An FTI Consulting spokesman said liquidators expected the winding up would take "approximately 12 months, subject to the expiration of the companies' contractual obligations on various projects" and the liquidators' investigations.
The spokesman said it was uncertain whether there would be any return to creditors of RGD Constructions, "other than to the first ranking secured creditor" upon realisation of the company's business assets.
"Separately, the secured and priority creditors of RGD Group may receive a return of up to 13.6 cents in the dollar and 100 cents in the dollar respectively, however any return is highly dependent on recoveries pursuant to an insurance claim," the spokesman said.
The report also showed YFG Shopping Centres had provided almost $3 million worth of bank guarantees to the companies for the Virtuoso and Hedge projects, guarantees which had since been cashed.
Stockwell managing director and Olympian Mark Stockwell said they'd ended up with a high quality product, but it had come "at a huge cost to both RGD and Stockwell".
He said RGD had never given up, which he was thankful for, but said "they had four different project managers and were nine months late, and that puts huge pressure on everyone".
"It was incredibly frustrating and difficult," Mr Stockwell said.
He said the company was continuing to assess their losses and was working with the liquidators, while the Virtuoso project neared completion.
The FTI Consulting report said preliminary investigations indicated the RGD companies may have been insolvent from "at least April, 2020", after RGD Group shareholder Greg Clark withdrew his financial support.
The report noted about $4.95 million had been loaned to Mr Grabbe.
The report, signed by Mr Park, said the preliminary views of investigators was that it "may not be commercial" to pursue any claim against the director, "as he is likely to consider bankruptcy in the near future".
Clark Group had since taken over a number of RGD projects, including Southbank at Birtinya Island and Seanna Residences at Bokarina Beach.
"Based on our estimates, the administrators do not anticipate there to be sufficient recoveries for any return to unsecured creditors," the report read.
The Daily has attempted to contact Mr Grabbe.