ASIC puts private credit on notice after Bathla collapse

“There have been some troubling developments recently in the private credit sector, most notably with the recent collapse of Bathla,” Court told the committee.

ASIC has been building its focus on the sector as private-credit funds increasingly compete with banks and other traditional lenders to finance property, infrastructure, and businesses.

“We have been calling out what we see for some time as risks associated with private credit. Over the past 18 months or so, we have increased our focus on private credit, beginning with our discussion paper that we released late last year in relation to public and private markets, and our release of the 10 principles that we recommend for private credit in November 2025,” she said.

ASIC calls for clearer market visibility

Court said ASIC’s concern was not that private credit lacked a legitimate role in financing the economy, but that the regulator and investors had limited visibility over wholesale funds, their underlying exposures, and the risks carried within the market.

“In our view, there is currently a lack of information and insight into wholesale private credit funds, and the limited information that we get in Australia is well behind that of similar jurisdictions,” she said.

That information gap is particularly significant where funds are exposed to illiquid property-development loans.

Such loans can be difficult to value, refinance, or sell quickly when projects stall, borrowers face funding shortages, or investor redemptions rise.

Court said ASIC had already sought improved transparency, so market participants could better assess risks before a borrower failure tested fund liquidity.

“That’s why earlier this year we also called for greater transparency and data, so that regulators and investors can better understand the risks in what an opaque market is otherwise,” she said.

The chairwoman stressed that lending standards, fund governance, and investor disclosures needed to keep pace with the sector’s growth.

“Our view is, when done well, private credit plays an important role in our financial ecosystem, financing productive projects and supporting infrastructure and commercial enterprise,” Court said.

“But recent developments demonstrate why strong governance, effective oversight, and clear and accurate disclosures are critical.”

Bathla facing $3.4bn+ creditor challenge

Restructuring firm Teneo was appointed administrator of Bathla Group’s key entities, Universal Property Group and Raj & Jai Constructions, on 25 August when the company entered voluntary administration.

The developer and builder, which had relied entirely on private credit, has left about 2,500 apartments unfinished and a further 14,000-dwelling pipeline uncertain.

The companies were initially reported to have around $3.6 billion in private-credit debt, while administrators later told creditors on Friday (4 September) that official liabilities were expected to exceed $3.4 billion.

Bathla’s lenders include Centuria Capital and La Trobe Financial, while Centuria and CVS Lane have since restricted fund redemptions amid exposure to the developer’s projects.

Teneo managing director Stephen Longley described an immediate cash shortfall when updating the media on 31 August, after lenders appointed receivers across between four and six sites.

“There’s no cash here. We don’t have any cash to pay wages. We don’t have any cash to pay suppliers,” Longley said.

“So unless that situation can be resolved, we won’t have any option other than to close the business. It won’t last until the end of the week. At the moment, we don’t have enough money for wages.”

Teneo noted that only five of Bathla’s 43 lenders were willing to support continued trading, including Centuria Bass, Ray White Capital, and La Trobe Financial.

[Related: Wave of new private credit compliance requirements unveiled]