Apartment projects in Sydney and Brisbane worth over $1 billion will be left in limbo after one of Crown Group’s co-founders lodged court action to have the major real estate developer wound up.
The legal action marks an escalation in a feud between the two owners of Crown, Paul Sathio and Iwan Sunito, which has left the company adrift since the beginning of this year and at least one development, a $500 million Sydney apartment and retail complex known as Mastery, in receivership.
Documents lodged with the corporate regulator show Mr Sathio’s PNR International has petitioned for Crown to be wound up, and the matter is due before the Supreme Court in NSW this month.
Crown Group co-founders Paul Sathio and Iwan Sunito.
“This action seeks to break the deadlock in the company’s operations because Mr Sunito has not authorised payments,” Mr Sathio said. “It’s no longer a workable relationship, hence the need for an external and independent person to take control of the company’s affairs.”
The company requires approvals from Mr Sathio and Mr Sunito to proceed with activity such as sales, repaying loans and paying bills.
Unfinished projects, amounting to $1 billion in value if completed, that have been put on hold as a result of the dispute include Crown’s developments in Sydney’s Eastlakes and Brisbane’s West End. The status of another project, a $US500 million ($760 million) tower in Los Angeles, is also in dispute.
In addition, a penthouse at a development in Waterloo remains unsold because any deal requires the approval of Mr Sathio and Mr Sunito.
Crown’s $500 million venture with state-owned developer Pembangunan Jaya Ancol to build a complex in Jakarta has also been scrapped.
The collapse of Crown is one of the more unusual developments in an industry that has been under considerable pressure from rising costs since the end of the COVID-19 pandemic. Porter Davis Homes, a major builder, collapsed in March. Metricon, another large residential real estate developer, last year reached a last-minute rescue deal with its financiers.
Mr Sathio and Mr Sunito initially fell out over differences in the strategy of the business and the shape of some developments. That dispute escalated even as the company became more successful – recording sales of more than $355 million in the year before the pandemic – until the two businessmen could no longer deal with each other, documents seen by The Australian Financial Review suggest.
Beyond in-progress developments, the standoff has meant around $3 million in retail earnings from completed projects cannot be taken out of one of Crown’s accounts to pay contractors, which includes around $1 million in unpaid fees for services such as garbage disposal at its buildings, according to documents seen by the Financial Review.
Crown has already been hit with lawsuits related to payments, including one from real estate advisory CapStra, acquired by investment house Wingate in 2021, for capital raising work it performed for the company.
Mr Sathio and Mr Sunito agreed to split the company in September. They signed a draft agreement that month, according to documents seen by the Financial Review. But the agreement did not proceed, which Mr Sathio blames on Mr Sunito.
“Despite funds being available, the relationship is at a stalemate,” he said, adding he would take his own legal action over the failed deal.
Mr Sunito did not respond to multiple requests for comment.
Earlier this month, he said his vision was to “continue building the legacy of Crown and to take the platform to a public entity” and that his personal vehicle, One Global Capital, had made an offer to buy the developer. That offer was “significantly higher than another offer on the table for 50 per cent of the company”.
Already, the dispute has led to one project being sold after Bank of China, which loaned money against the Mastery development in inner Sydney, called in receivers. Crown W48, the holding vehicle for the Mastery project, is now being administered by Newpoint Advisory.
“The Mastery asset has yet to receive a formal offer, but it has received very strong interest in anticipation of the EOI close on 17 August. There are in excess of 30 stakeholders interested that have signed NDAs looking into the asset,” Colliers’ James Cowan, who is selling the project alongside the agency’s Matthew Meynell and Trent Gallagher, said.
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