Australia’s corporate watchdog is investigating the collapse of Western Sydney property developer Bathla.
The company entered administration in August with debts of more than $3 billion, with efforts to save the company falling short.
Work on all of its construction projects came to a halt in late September, leaving about 3000 apartments and homes in limbo and up to 350 staff without jobs.
Bathla’s managing director, Bhart Bhushan, blamed “perfect storm” of circumstances, including rising construction costs and the federal budget in May, for the company’s collapse.
Batha had been largely funded by capital from 40 different private credit funds and non-bank lenders.
ASIC Commissioner Simone Constant said investigations into Bathla’s activities in the lead-up to its administration had begun.
“I can confirm we have commenced a formal investigation in relation to the conduct of the affairs of the Bathla Group,” she said on Tuesday.
“We are making inquiries in relation to private lenders but have not commenced any formal investigation at this stage.”
Bathla’s administrators, Teneo Australia, have been contacted for comment.
On Monday, Constant said Bathla’s collapse “highlighted the risks that can emerge in private credit when this message is ignored”.
“The Bathla collapse drives home the importance of strong governance, appropriate valuations and clear disclosure to private credit investors,” she said, adding that ASIC was working on tracing the approximately $3.2 billion in funds loaned to Bathla.
It comes after ASIC ordered Angas Securities, an Adelaide-based private credit firm, to stop accepting money into two of its funds after it was found to have failed to adequately disclose its financial position and exposure to Bathla.
“ASIC is concerned that investors in both funds may not have been adequately informed about the financial position of Angas Securities and the risks arising from that position,” ASIC said on Monday.
“ASIC also has concerns about disclosures to investors in the Angas Prime Income Fund relating to its exposure to the collapsed Bathla Group and the risks arising from that exposure.”
Angas Securities has been contacted for comment.
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