Failed developer Caydon owes financier over $200m – and a Mercedes
Failed developer Caydon, which was likely trading while insolvent for the past two years, owes financier OCP Asia more than $200 million and Mercedes-Benz $285,000 for a luxury G63 wagon among its other debts, liquidator Malcolm Howell said.
Creditors will likely vote next week to put the company into liquidation, following the receivership triggered last month by Hong Kong-based OCP of the developer, which boasted at one time of a portfolio of $4 billion-worth of projects, Jirsch Sutherland partner Mr Howell said on Tuesday.
A report to creditors published last week shows that while Caydon made a $3.7 million pre-tax profit for the year to June, liabilities outweighed assets by almost three times and it had been unable to meet immediate debts – likely making it insolvent – at least since June 2020.
“I haven’t been given total debt [to OCP] but it’s significant. I’m estimating over $200 million owing,” Mr Howell told The Australian Financial Review.
“If OCP hadn’t pulled the pin the whole thing might have continued on for some period of time.”
However, it is not yet certain that the company headed by director Joe Russo had been trading while insolvent. Liquidators will look at funding flows within the different Caydon entities – close to 30 in total – to work out what financial support was available to the company and whether it was trading while insolvent, Mr Howell said.
Another developer failure
The collapse of the company behind Melbourne projects such as the Malt District project at the Nylex site in Richmond and the Alphington Mills project on the site of a former Amcor paper mill in the inner north-eastern suburbs is the biggest developer failure since Melbourne-based Steller Group (also funded by OCP) and Sydney-based Ralan went under in 2019.
Settlements of Alphington Mills and the 107-unit Due North project in Preston are unaffected by the receivership.
An expansion into the US build-to-rent market, along with a 45 per cent rise in building costs over the past year, have already been listed as reasons for the collapse.
Mr Howell said the company also had an outstanding tax bill of about $7.5 million. Caydon had kept servicing its tax debt but only partially and the bill was accumulating. It had not filed a tax return in 2020 or 2021, he said.
“It’s a significant debt that was there,” Mr Howell said. “The director was aware of and knew it had to be paid. And the ATO would start to put significant pressure on the company to get that paid.”
Investigations to date show the company had 23 employees with claims so far worth nearly $21,000, although that represented the claim of just one employee, Mr Howell said.
Long list of creditors
There are 43 unsecured creditors with claims together worth about $15.6 million. They include Qualitas Real Estate Finance ($1 million), King & Wood Mallesons ($535,000), Knight Frank Australia ($281,000), Deloitte Private ($124,000) and Google ($44,000).
A separate category of creditors includes liabilities of $535,000 to Shuquin Cao and $845,000 to an entity called Sandhurst Trustees Limited.
Mercedes-Benz Financial is a secured creditor, with $285,515 outstanding on a 2020 Mercedes-Benz G63 AMG Wagon that the company contracted to buy for $330,000 two years earlier and had a likely current value of $274,000.
Mr Howell said he had written to the receivers, as the car fell under the security agreement that entitled them to recover all debts owed to the company.
“They will deal with Joe [Russo] regarding that,” Mr Howell said. “If Joe can get the repayments up – they’d be substantial – someone might be able to take over the lease.”
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