Monday 25th September 2017
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The liquidators of the failed Mainzeal group of companies will face off in court with the building firm's directors next year in what's scheduled to be a six-week hearing.
Liquidators Brian Mayo-Smith and Andrew Bethell of BDO have largely pinned any substantial return to out-of-pocket Mainzeal creditors on achieving a significant recovery from a suit against the companies former directors, Richard Yan, Peter Gomm, Jenny Shipley, Clive Tilby, Paul Collins and Siew Kwan. They filed proceedings in the High Court alleging breaches of directors' duties through a series of restructuring in the two years before Mainzeal fell over, reckless trading, and claims against related parties.
In their latest six-monthly update released today, the liquidators said a six-week hearing has been scheduled to start on Sept. 3, 2018. The action is backed by a third-party litigation funder, which provided $349,000 between Feb. 28 and Aug. 27. Legal fees amounted to $280,000 in the latest period.
The liquidators received 1,400 claims from unsecured creditors totalling $157.7 million, and at the time of the latest report, they had admitted 1,396 claims in full or in part totalling $117 million.
"We do expect that there will be some funds available for distribution to unsecured creditors," they said. "The quantum of any ultimate distribution to unsecured creditors will depend on the liquidators being able to achieve significant recovery from actions available to the liquidators, the companies and KFL (King Facade Ltd)."
The Mainzeal liquidators have had to contend with court action from the construction group's principal, Richard Yan, who opposed the inclusion of Richina Global Real Estate (RGRE) and Isola Vineyards to the administration.
In 2015, the Court of Appeal upheld Yan's bid to set aside the liquidation of RGRE and exclude Isola Vineyards, saying it was premature to do so before disputed debts were determined. Prior to the hearing, the liquidators had complained about the veracity of information they had received relating to RGRE.
The liquidators had previously said they were investigating RGRE's transactions with related parties in New Zealand and internationally, including the restructures of related party debts that occurred around July and December 2012, saying the commercial rationale wasn’t evident.
The December 2012 restructure saw the $15.2 million debt owed to Mainzeal Property & Construction transferred to MGL Trading in exchange for shares.
Related companies Mainzeal Property & Construction and Mainzeal Living were tipped into receivership on Feb. 6, 2013, and 200 Vic joined them on Feb. 13. Liquidators were appointed to the Mainzeal group later that month on Feb. 28.
The receivership of Mainzeal Property & Construction left a surplus of $1.1 million for the liquidators of the wider group, who represent unsecured creditors. The receivers were appointed by BNZ, which was owed $11.3 million, the bulk of which was over the Mainzeal headquarters building on Auckland’s Victoria St.
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