ASIC Opens Formal Investigation Into Collapsed Bathla Group
Australia's corporate regulator has opened a formal investigation into the affairs of Bathla Group, the Sydney developer that collapsed owing creditors at least $3.4 billion. ASIC has not said what conduct it is examining, and it has not opened a formal probe into private lenders.
The Australian Securities and Investments Commission (ASIC) has launched a formal investigation into the collapsed Bathla Group, the Sydney property developer that went into administration owing creditors at least $3.4 billion. The regulator has not said what conduct it is examining.
"I can confirm we have commenced a formal investigation in relation to the conduct of the affairs of the Bathla Group," ASIC commissioner Simone Constant said in a statement.
Bathla is a sprawling group of more than 500 companies. It is one of Sydney's largest residential developers.
Lenders under scrutiny, but not yet investigated
ASIC is also looking at the private lenders that financed the group. It is examining how billions of dollars were raised and whether retail investors face losses.
But the regulator drew a line between the two inquiries. "We are making inquiries in relation to private lenders but have not commenced any formal investigation at this stage," ASIC said.
The regulator has spent several months examining Bathla's borrowing arrangements and whether misconduct occurred.
Projects in doubt
Bathla entered voluntary administration on August 25. Its collapse has put the future of more than 200 projects in doubt.
That includes roughly 2,000 homes under construction and another 13,000 in the development pipeline. Construction has stopped across the group's projects.
Administrators Teneo are pursuing an orderly sale of undeveloped land and other assets. Private lenders have been moving to take control of Bathla properties that secured their loans.
The NSW Supreme Court has given the administrators until September next year to convene the second meeting of creditors. The extra time lets them investigate the group's complex finances.
What ASIC has said before
ASIC chair Sarah Court told Senate estimates last month that the regulator was working closely with the administrators. They are tracing loans to Bathla across its more than 500 companies and 40 lenders.
In early September, Court told a parliamentary joint committee on financial services that ASIC had been engaging with Bathla and its administrators for the previous month. She said it was examining whether any misconduct took place.
The formal investigation comes amid a wider crackdown on private credit. ASIC has also issued interim stop orders against two Angas Securities funds over disclosure concerns, including one fund's exposure to Bathla Group.
ASIC looked at the developer once before, in 2011, over alleged unconscionable lending practices. Bathla co-founder Bhart Bushan and Universal Property Group, Bathla's main corporate entity, agreed then to a compensation scheme for affected homebuyers.
