Eye-watering debt owed by failed developer
HALF a billion dollars in debt have crushed one of the Gold Coast's biggest landholders, putting $1.4 billion in development in doubt and throwing staff of a well-known resort into limbo.
A group of 58 companies of developer William O'Dwyer's Ralan Group went into administration late on Tuesday.
The group was one tower into its ambitious four-tower Ruby hotel and residential project at Surfers Paradise and also owns the neighbouring Paradise Resort.
Staff of the Surfers Paradise operations were emailed overnight with news of the collapse, but were told it was "business as usual" and warned against speaking to the media.
The hotel and resort are both still taking bookings, and administrators say existing bookings remain valid.
Administrators Said Jahani, Graham Killer and Philip Campbell-Wilson of Grant Thornton have been appointed to the group's companies, which own properties on the Gold Coast and in Sydney.
A statement from grant Thornton said they were undertaking an "urgent financial assessment of the group" and they'd been appointed because "the directors felt the company was in a stressed financial situation".
"(They) decided that voluntary administration was the best path forward as the companies were either insolvent or likely to become insolvent," the statement said.
"While the administrators remain in control, it is business as usual for The Ruby Collective and Paradise Resort and people can be assured their existing bookings stand, and both properties are accepting future bookings at this point in time."
The administrators are still completing their early investigations, but said initial indications were that the group owed about $500 million to "a range of small to large creditors".
Gold Coast staff are employed at the Ruby hotel and across Paradise Resort in its retail store, entertainment program, kid's club, cafe, bar and in its housekeeping and maintenance operations.
A Paradise Resort staff member, who did not want to be named, said workers were already seeking new jobs.
"There are probably 500 of us across the two Gold Coast operations - in retail, entertainment, Kid's Club, housekeeping, maintenance and management," she said.
"All of us are saying 's**t have we even got jobs now?'.
"We're all expecting to turn up and be told we don't have jobs anymore, we're looking for new jobs because we're terrified we're about to be thrown in the deep end."
The staff member said many of her colleagues were young, casual workers and not generally high earners.
"They're telling us it's business as usual, but we're not stupid, we know when a company goes into voluntary administration there will be cuts," she said.
"A lot of us will have to move back in with our parents."
Sydney-based Ralan, headed up by Mr O'Dwyer, had been bullish about developing a further three towers on the Surfers Paradise site of the Paradise Resort after completing its first tower in October.
Welsh-born Mr O'Dwyer, 53, stormed into town in 2015, splashing $95 million on Surfers Paradise properties and quickly becoming one of the suburb's biggest landholders.
The 2.5ha Ruby development is named after the youngest of his three daughters while the company name Ralan is named for his older daughters Rachel and Lauren.
He'd earlier visited the Coast as a backpacker in the 1980s and worked at Jupiters Casino, now called The Star.
The company in August announced it would commence construction of its second tower early this year, with completion four towers by 2022, of however no work has started since.
In 2016, Mr O'Dwyer backed out of a $39.5 million deal to buy a full city block in Surfers Paradise, losing his $3.95 million deposit.
The block, north of QT Resort, was bought by a consortium which included former casino operator Aquis, and is back on the market.
Mr O'Dwyer said in November the fast-tracked $1.4 billion Ruby Collection, featuring towers from 32 to 60 storeys, would spark 5000 jobs for the city.
However, even then there were reports sales in the first tower were being denied finance, with valuations coming in up to 30 per cent lower than expected.
The first creditors meeting for the companies will be held at the Wesley Conference Centre in Sydney on August 9.