Updated September 3, 2026 — 2:46pm,first published 12:40pmThe state’s building regulator has ordered the collapsed Sydney developer Bathla Group to fix serious defects in one of its major projects as administrators continue negotiations with lenders to find short-term funding to keep the company operational.Bathla’s main corporate entity Universal Property Group has been hit with a prohibition and building work rectification order for its under-construction development in the Illawarra’s Kembla Grange, preventing any buyer from living there until the defects are fixed.Sue Mancuso and daughter Marie Sinclair stand in front of the fenced-off Kembla Grange development.Wolter PeetersAdministrators Teneo on Thursday announced Bathla’s employees would receive a partial payment, covering wages accrued from August 25 when administrators were appointed.Bathla entered voluntary administration last week with $3.3 billion in debts. For the past few days, administrators Teneo have been desperately trying to secure $20 million in funding from private lenders to pay the company’s 350 staff by Thursday and finish its 45 construction projects.“Conversations with lenders about a short-term funding package are continuing. The situation is complex and, if secured, the funding will only give us a matter of weeks to determine if other sources of funding are available for the company’s longer-term requirements,” Teneo’s Stephen Longley said.“A key focus now is the first creditors meeting where those owed money will be given an opportunity to hear from the administrators, ask questions and consider procedural matters.”The first creditors meeting is scheduled for Friday. NSW Treasurer Daniel Mookhey said the state government would be represented at the meeting, and he expected Bathla’s collapse to be a complicated process.“Our paramount interest here is to look after the buyers, not the bankers, and to make sure that people who have bought off the plan have can have confidence in their particular outcome in this administration process,” Mookhey said in Mumbai during a four-day trade trip. “Now, I’ve got to be upfront with those people. This is complex, and there’s a lot of complexity here. This is going to be, we expect, one of the most complex corporate administrations Australia has seen.”Earlier on Thursday, Building Commission NSW identified 12 serious defects in the five-building development, including non-compliant installation of a waterproofing system at the basement slab.“The non-compliant waterproofing system to the basement slab soffit will lead to water ingress and cause unhealthy or dangerous conditions, loss of amenity for occupants and undue dampness or deterioration of building elements,” the order read.Failure to comply with the requirements listed in the building work rectification order, which must be complied with within eight months, is a criminal offence.A prohibition order means an occupation certificate cannot be issued for the development until the building work rectification order is revoked by the commission.Marie Sinclair’s elderly parents are among buyers who purchased an apartment in the development, which they were told would be completed by December 2025. When she visited in September last year, she found doors with keys left unattended, graffitied walls, half-finished copper piping and multiple broken surfaces.Sinclair said after the building order was issued on Thursday “it is really good news” but she remained uncertain about the next steps.“Does that mean they have eight months to have the rectifications completed? Also will purchasers need to wait eight more months before moving in?” Sinclair said. “For many of us, this means more money and rent and storage fees for everyone.”When this masthead asked Bathla last month about the development, the company’s spokesperson said 80 per cent of the 108 units had been sold off the plan and that buyers would be able to move in “during October or November”.“On completion, the project will be handed to the buyers in great condition,” the spokesperson said at the time.The NSW government on Thursday doubled down on its stance not to bail out Bathla, with Deputy Premier Prue Car saying they have to be very careful with taxpayers’ money.“We’re not going to be spending money that belongs to the people of NSW to bail out private creditors for a developer that has gone into administration or receivership,” she said.With Max Maddison and Michael McGowanThe Morning Edition newsletter is our guide to the day’s most important and interesting stories, analysis and insights. Sign up here.From our partners