ASIC reflects on Bathla collapse

ASIC Chair Sarah Court says the collapse of Sydney property developer Bathla is a “troubling development” for the private credit sectors.

Voluntary administration details

Bathla entered voluntary administration last month, leaving around 45 property sites active and thousands of buildings unfinished. The firm owes between $3.1 billion and $3.4 billion to more than 40 secured lenders. Several of these lenders operate within the private credit space, including Centuria Bass Credit and CVS Lane. This scale of indebtedness represents a significant stress test for lenders who have extended capital based on the perceived stability of the developer’s asset base.

Centuria Bass Credit confirmed in an ASX statement that it has funded six separate assets for Bathla, two of which relate to ongoing construction. The company said it is already paying subcontractors directly within the limits of existing loan facilities. It intends to progress these projects to title issuance to allow presales to occur. The remaining facilities cover residual stock loans and land loans. This approach aims to minimise disruption to the workforce and preserve the value of the underlying construction assets during the administration process.

The company noted that its platform benefits from cross-collateralisation across Bathla Group facility exposures. Following the voluntary administration, Centuria Bass Credit believes it has access to a broader range of options to accelerate recoveries across the cross-collateralised security structure. This legal mechanism allows the lender to use assets from one project to secure loans for another, providing a buffer that may help mitigate the impact of the developer’s insolvency on the specific loan book.

Regulatory focus on the sector

Court, who took on the ASIC chair role earlier this year, said the corporate regulator has been noticing problems with private credit “for some time.” Efforts already undertaken by the regulator include analysis of fund disclosures, marketing, income transparency, governance and valuation. The regulator is specifically looking for instances where the risks associated with illiquid investments are not adequately communicated to investors.

“Over the past 18 months, ASIC has increased its focus on private credit, beginning with our discussion paper on public and private markets and the release of the 10 principles of private credit in November 2025,” she said.

“Currently there is a lack of information and insight into wholesale private credit funds. The limited information set we get in Australia is well below that of similar jurisdictions like the US or the UK.”

Court said that when done well, private credit plays an important role in the financial ecosystem by financing productive projects and supporting infrastructure and commercial enterprise. However, recent developments reinforce why strong governance, effective oversight, and clear and accurate disclosures and valuations are critical. The Bathla collapse serves as a stark reminder that rapid growth in unregulated or lightly regulated lending markets can expose the broader economy to systemic risk.

Industry standards and surveillance

Last November, ASIC released REP 280 Private Credit Surveillance, which surveyed 28 private credit funds between October 2024 and August 2025. The survey included Australian managers such as Metrics Credit Partners and La Trobe Financial, global firms like KKR, and smaller managers such as RELI Capital. The regulator utilized the data to identify trends in how these funds are structured and managed.

The report assessed issues such as fund disclosures, marketing, income transparency, governance and valuation. The regulator also issued interim stop orders on four private credit funds to protect retail investors from acquiring products under Product Disclosure Statements that may be defective and not worded and presented in a clear, concise, and effective manner. These enforcement actions demonstrate ASIC’s willingness to intervene when it detects practices that could mislead investors about the safety or performance of their investments.

ASIC is not the only body scrutinising the sector. The Financial Services Council has released an industry standard for private markets and private credit, designed to lift industry practices. The standard will apply to all of the FSC’s fund management and superannuation fund members from 1 July 2027. This timeline allows the industry time to adapt its compliance frameworks to meet the new benchmarks before the requirements become legally binding for the majority of asset managers.

The Standard sets expectations across governance and accountability, valuations, liquidity and leverage, conflicts of interest, fee and income transparency and investor disclosure. It also includes additional credit risk management requirements for private credit managers. By establishing these baseline requirements, the FSC aims to reduce the likelihood of failures like the one seen with Bathla, thereby restoring confidence in the private credit market as a whole.