Updated August 31, 2026 — 6:08pm,first published 1:36pmThe potential collapse of one of Sydney’s largest building companies threatens to engulf its suppliers and contractors, sending construction costs soaring as the state struggles to meet its housing targets.Teneo, the administrator of Bathla Group, has until Thursday to find $20 million to repay eight weeks of staff wages and fund near-complete projects. If it fails, Bathla will be shut down.Teneo administrator Stephen Longley (centre) told reporters on Monday that Bathla needed to find cash by Thursday.Sitthixay DitthavongBut the shockwaves of the company’s financial crisis, which if not resolved by Thursday will lead to it entering liquidation, are already spreading throughout the housing sector. Bathla is believed to owe millions of dollars to subcontractors who are considered unsecured creditors.The crisis piles more pressure on the already-strained housing industry, which has been struggling to build financially viable projects after numerous interest rate rises and increasing construction costs associated with the war in the Middle East, and which is unlikely to be able to meet the state government’s goal of 377,000 new homes by 2029.One subcontractor who had worked with Bathla for years told the Herald that the company owed him between $700,000 and $900,000. Now, the subcontractor owes the Australian Taxation Office (ATO) about $150,000 and his own suppliers about $200,000. Those suppliers have begun to refuse his requests for credit.“All of the money I owe to the suppliers and the ATO is only because of Bathla not paying me. I have written messages [to Bathla] showing them my business is collapsing, my entire business and my entire life is getting torn apart by them not paying me, and still nothing is happening.”Bathla’s hundreds of staff were called in on Monday morning for a meeting with administrators.Sitthixay DitthavongThe subcontractor, who requested anonymity to speak openly about his debts, said his suppliers were now struggling to pay their own bills. He said he felt trapped into working with Bathla because its management often told him they would only pay his invoices if he started work on a new site.KPMG urban economist Terry Rawnsley said the flow-on effects of Bathla’s many unpaid subcontractors will result in higher costs for the building sector at the same time as the NSW government approves more homes for construction.“The worst-case scenario is [the subcontractors] go out of business, which means then there’s less capacity in the development sector, or they’re going, ‘Well, I lost $100,000 to these guys, I’ve got to bump up my prices or my charge-out rates for everyone else to try and recoup that’,” he said.“It’s going to be another little price shock for developers as they go to subcontractors to get housing built … All of that adds to an additional cost to development in western Sydney.”Bathla has about 2500 homes under construction in NSW, which represents about 4.5 per cent of all homes being built in the state. If those homes cannot be built, it would represent a “depressing … whack to the supply that we’re trying to get going up, not coming down,” Rawnsley said.The company also had about 14,000 homes in the pipeline, mostly across western Sydney, where construction had not yet begun. If this land is sold off by Teneo in an effort to recoup money, it would represent a delay to housing completions by several years.The figures prompted Urban Taskforce developer lobby boss Tom Forrest at the weekend to call for help “to prevent this event becoming a contagion that impacts upon the whole industry”.Staff not paid for eight weeksSome of Bathla’s staff were stood down for a week on Friday as Teneo assessed who was “mission critical” to completing the homes now being built, said Stephen Longley, the company’s senior managing director. But some staff have not been paid for more than eight weeks, representing costs in excess of $2.5 million.“The staff here are amazing,” Longley said. “They want to finish the projects, and so they are taking a leap of faith with us this week.”Longley said he appreciated that staff were experiencing “a lot of personal stress”. Some migrant staff held Australian visas that would require them to leave the country if they were made redundant and unable to find other work, he said.The NSW government declined at the weekend to step in to prevent the company’s collapse, with Premier Chris Minns saying on Saturday he hoped “another financier … [or] some other developer” would lead the rescue efforts. No other developer has put their hand up to help.Longley said all 43 private capital lenders to Bathla were responsible for the company’s future.“We’ve got so many different lenders here, and we’ve all got to contribute,” Longley said. “We can’t just fix one site. We’ve got to fix the whole of the head office so that all of the sites can get up and running.”Teneo has borrowed $1 million from head office to keep the lights on.Hundreds of buyers who bought units off the plan from Bathla are also waiting to see what will happen to their deposits and future homes. Longley was asked on Monday what his message was to those awaiting homes to be built. “Hope that we get the funding to finish the product.”Get alerts on breaking news as it happens. Sign up for our Breaking News Alert.From our partners