Client Overview

The Client operated a large private school in Western Brisbane providing education and learning services for children from pre-prep through to secondary school. The Client received a proposal from a developer and principal contractor for the development of new childcare facility which was under consideration by the Investment and Audit Committees.

​Engagement Scope​

Engaged to complete a high-level due diligence process based on limited financial information submitted by the developer and principal contractor as well as publicly available information.

Our Approach

Our due diligence procedures included: ​​

• Overview of group structure of Developer and Principal Contractor ​​
• Review of land ownership and proposed commercial arrangements between the developer parties ​​
• Searches of public registers, including ​​
  • Historical ASIC and ABN searches, including beneficial ownership​​
  • Litigation searches in Queensland, New South Wales, Victoria and Federal Civil Courts​​
  • PPSR searches​​
  • Building licence searches (including associated entities)​​
  • Search of banned and disqualified directors​​
• Financial Statement review, including parent, subsidiary and group holding entities ​​
• Financial viability analysis of the developer and principal contractor, as well as capacity within the Group to provide financial support or guarantee obligations ​​
• Review and assessment of the letters of support from third parties

Key Findings and Outcomes​

A detailed report was prepared for the Board which addressed the following key aspects:​​

Development Structure

The review identified that the landowner for the proposed development was not a party to the development proposal. After discussions with the development parties, it became apparent that the development parties did not hold a legal interest in the proposed development site. ​

Funding Structure​

The analysis indicated that the nominated development parties held insufficient resources to complete the development. After discussions with the development parties, it became apparent that associated entities would be relied upon to fund the project. Our analysis indicated that sufficient assets existed within the wider group, however there were no agreements or documents in place to demonstrate funding was confirmed and available for this development.

Construction Licence

The searches indicated that the proposed development entities did not hold the required construction licences to complete the development. After discussions with the development parties, it became apparent that associated entities would be relied upon to meet the licencing requirements, however no agreements or documents in place to formalise this transaction.

Previous Management Failures

The searches indicated that one of the directors of the Development parties has a series of entities placed into liquidation. Further searches identified that this director was disclosed as a Significant Person in an Independent Commission Against Corruption investigation relating to these insolvencies.

Protecting Your Business Interests

Ready to safeguard your business with thorough due diligence? Our Restructuring & Recovery experts can help you assess potential risks and make informed decisions. Contact us today for a consultation and take the necessary steps to secure your business.

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