THE credit crunch has claimed another developer's scalp, with Tweed identity Paul Brinsmead's company Resort Corp going into administration this week because of cash flow problems.
While the actual amount of debt owed by The Beach at Cabarita developers has not been confirmed by the administrators, it is believed creditors of the company part-owned by Mr Brinsmead, are owed around $300 million.
“It is not like the directors of Resort Corp have left a gaping $300 million hole in the company's finances,” said Andrew Robinson, the solicitor from Robinson Legal in Sydney representing the company's directors.
“The company has both secured and unsecured debts, but has assets to cover more than the $300 million that has been reported.
“It is not the case, as it has been reported, that the company has collapsed and creditors will not be paid back.
“The company has a liquidity and cash flow problem because of the current market.
“In this market when sales run dry the first thing developers do is look to the banks for credit so they can continue to pay their bills, but banks aren't offering the credit because of the global credit crunch.
“Under Australian Corporation Law, this left the directors with no other choice then to appoint administrators to the company to work out a plan to allow creditors to be repaid.”
The Burleigh-based company that is co-owned by Peter Madrers has recently completed the $210 million Quay West development at Noosa on the Sunshine Coast and had plans to build a $500 million residential and resort complex in Townsville, among a list of other projects.
Mr Robinson said having so many projects in the planning and holding land for future developments created the cash flow problem for the company.
“The company has several projects in the planning or land-bank stage, which require a lot of money to keep going until you see any returns from sales,” he said.
“This has led to the liquidity problem, but it is too hard to say which of the developments, if any, was the main cause.
“There is still stock (apartments and retail space) to be sold at projects in the Tweed area and the administrators will be looking for the best ways to sell that stock to help pay back creditors.”
Paul Brinsmead is the son of Tropical Fruit World founder and former Tweed councillor Bob Brinsmead.
Since Paul Brinsmead launched the development company with Mr Madrers, Resort Corp has created several multi-million dollar developments on the Tweed including the $75 million The Beach project and the luxurious Santai at Casuarina.
Santai is now managed by Domain Resorts.
Resort Corp also left its mark in Kingscliff where it developed several upmarket apartment projects including Zen and Soraya, as well as the retail development Nor Nor East.
A spokesperson for Resort Corp or administrators David Clout and Associates of Brisbane could not be contacted yesterday.
Mr Robinson said the administrators continued meeting with stakeholders yesterday to start work on a plan for the recovery of Resort Corp's debts.
“The directors plan to apply for a Part 10 arrangement, which means that they hope to sell every asset that the company has for the benefit of its creditors,” he said.
“They are traumatised by this and want to see every creditor paid out in full.”
Staff loses are not expected, according to Mr Robinson, but the decision was now “in the hand's of the administrators.”