PBS Building administration timeline shows history and lead up to company's collapse

But for those on the inside, challenges had been bubbling away for some years, during which there were attempts to turn things around, administrators say.

On March 3, a Friday afternoon, subcontractors on a number of Canberra construction projects were told to collect their tools and belongings before the job sites were locked up.

By Tuesday, March 7, five PBS Building companies were in voluntary administration. Prior to the appointment of RSM Australia as administrator, 169 PBS staff members were made redundant.

Subcontractors were left scrambling with no certainty of when they would be paid. It has since been revealed more than 500 creditors across the ACT, NSW and Queensland could be owed about $169 million collectively.

Details of how the administration unfolded, and the group's history in Canberra, were revealed in a more than 200-page creditors' report released in June. It goes some way to explaining how a 33-year-old business fell apart.

PBS Building began life in 1989, when brothers Ian and Peter Carter started a residential building business in the ACT.

In 1992, Prestige Building Services Pty Ltd became an incorporated business and the "corporate vehicle" for the trading operations of the PBS corporate group.

The PBS corporate group had two main operations: a building and construction arm - which the companies in administration fall under - and a property development arm. A third arm of the group was contemplated, which was to be a facilities management division, however it did not eventuate.

In the late 1990s, Prestige Building Services secured a large contract to construct the Sydney Olympics athlete village.

Around this time, another pair of brothers, Wayne and Warren Ahrens, were introduced to the business, looking after the NSW and ACT projects respectively.

From the early 2000s, various PBS companies were founded.

In 2005, Prestige Building Services Pty Ltd ceased being the corporate entity for the trading operations of the PBS corporate group. Meanwhile most of the companies in administration today were founded.

An original PBS Building (ACT) Pty Ltd was incorporated in 2005, which later became Ply (ACT) Pty Ltd in 2012.

The name Ply might be familiar to some Canberrans. Ply (ACT) Pty Ltd entered external administration in 2013 with debts of more than $42 million, according to previous reporting by The Canberra Times. The company was constructing the Nishi building in New Acton at the time.

PBS Homes (ACT) Pty Limited was incorporated in 2007 and later became PBS Building (ACT) Pty Ltd, one of the five companies now in administration.

In 2016, Peter Carter left the business and a number of leadership changes were made in the following years.

Adam Moore was introduced to the business in 2017 and was appointed as a director. In 2019, Domenic Fussell was appointed as a director of PBS Building NSW.

Also in 2019, Wayne Ahrens resigned as a director of the majority of the PBS companies with the exception of PBS Building (QLD), which he remained a director of until May 2022.

While Wayne was looking after operations in Hervey Bay, his brother Warren Ahrens relocated to Queensland to oversee the Brisbane operations of PBS Building (QLD).

The first signs of trouble for PBS came in 2020, the administrator noted in its report.

"Most, but not all of these challenges stemmed from the COVID-19 pandemic and the widely publicised impact that this had on the construction industry," the report stated.

The effects of COVID-19 did not have an "immediate catastrophic impact" on the company, due its strong financial position. But the company began to experience "operational challenges".

These were exacerbated by financial distress within some of the company's subcontractors, material shortages and subcontractor resourcing challenges, the report stated.

Cost escalations on fixed-price and fixed-term contracts, some of which were signed in 2019, were also a factor.

Senior management reported these issues to the board in April 2020. The challenges continued into the 2022 financial year, when it became clear to the senior management team and the board that a number of the group's projects were being impacted.

By September 2021, financial year profits were "well below target".

In October 2021, the board launched the first phase of a turnaround plan, in which the group was able to negotiate contract with the principals of some projects. This saw an increase in contract values of $6.4 million.

The group also offset potential losses of $5.5 million through the "mutual termination of selected projects".

This phase continued until June 2022. In the same year, more changes were occurring across leadership.

Mr Moore, who had been national general manager for PBS Building since 2021, became managing director of PBS Property Group in January 2022, taking over the role from Ian Carter.

Ian Carter remained a director of the companies and stayed involved in development division of the group but resigned as an employee in May 2022.

Before the end of the 2022 financial year, it was forecast the company would be $14.1 million short of net profit targets. Phase two of the turnaround plan began in July.

The administrator was advised phase two "broadly involved engaging with a number of principals regarding continued and increased support".

Agreements were reached with four principals, and negotiations continued with four others, which injected $5.4 million into the PBS companies in December 2022.

PBS' senior management team also "took steps to rationalise the size of the companies' operations" and refocus on the ACT business, with a view to rescale in the future.

The directors at the time requested further support from the parent company PBS Property Group, which advanced $9.5 million to the companies between September and December 2022.

In October 2022, the companies reported "material net operating losses on a consolidated basis".

In December 2022, while phase two of the turnaround plan was under way, the directors enacted the third stage of the plan which "broadly saw a continuation of the same strategies", the administrator noted.

Earlier in mid-2022, Warren Ahrens resigned as a director of all companies with the exception of PBS Building (QLD), which he later resigned from in early 2023. Domenic Fussell also resigned from the NSW company in 2023.

Ian Carter and Adam Moore remained as directors and in control of the companies.

The administrator's investigations found it had become apparent in February 2023 that PBS was unable to secure the necessary level of additional working capital.

It was then recommended the directors consider the safe harbour regime, designed to help directors turn a business around without fear of being pursued personally for insolvent trading.

The group engaged an independent registered liquidator in February 2023 to provide the safe harbour advice.

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Soon after, the decision was made to place the five companies into administration and RSM Australia was appointed on March 7, 2023.

In its report, the administrator noted each of the companies showed different indicators of insolvency at different times.

But considering the companies as a whole, February 10, 2023 was identified as the "critical" date by which PBS had become insolvent.

The more than 500 creditors may have to wait until September to learn the fate of the PBS companies, after RSM Australia adjourned the second creditors' meeting earlier this week.

At the meeting, creditors will decide whether it is in their interests for the PBS companies to execute a deed of company arrangement, whether the administration should end or whether the companies should be wound up.

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