Claims of $111 million are being “admitted” against failed builder Mainzeal Group and its many associates, according to the latest six-monthly liquidation report out yesterday.
Brian Mayo-Smith and Andrew Bethell of BDO Auckland and Stephen Tubbs of BDO Christchurch said 1400 claims had been received for $158.3m.
But not all claims would be admitted, they said.
Mainzeal Property and Construction, Mainzeal Living, 200 Vic, Mainzeal Group, Building Futures Group Holdings, Building Futures Group, Mainzeal Residential, Mainzeal Construction, Mainzeal, Mainzeal Construction SI, MPC NZ and RGRE are in liquidation.
The three were earlier appointed to King Facade and referred to that in their summary of claims being admitted.
“Of the approximately 1400 claims totalling $158.3m received from creditors of the companies and King Facade, a total of 1390 claims have been admitted either in full or in part totalling $111m,” the liquidators said in the August 28, 2021, to February 28, 2022, six-monthly report.
“We expect that there will be some funds available for distribution to unsecured creditors.”
The report also summarised the latest court proceedings.
“[Directors] Richard Yan, Dame Jennifer Shipley, Peter Gomm and Clive Tilby were held jointly liable by the High Court for reckless trading and were ordered to pay $36m with Mr Yan being liable for $18m alone and Dame Jennifer Shipley and Messrs Tilby and Gomm liable for $6m each jointly with Mr Yan,” yesterday’s report said.
Sir Paul Collins was found not liable, the liquidators noted.
Yan and the other directors appealed separately the High Court decision and MPCL and the liquidators cross-appealed. The appeals and cross-appeals were heard in the last week of July 2020 with the Court of Appeal releasing its decision in March 2021, the report recalled.
In its decision, the Court of Appeal held that the directors were in breach of their duties under both s135 and 136 of the Companies Act.
But the court held that no compensation for breach of s135 was recoverable from the directors.
The directors were held liable under s136 for all obligations to principals, bond providers who have indemnified those principals and subcontractors in respect of the four significant construction contracts entered into by Mainzeal after January 31, 2011, and all obligations incurred by Mainzeal to creditors from July 5, 2012, onwards plus interest and costs, the liquidators noted.
The Court of Appeal referred the matter back to the High Court to determine the quantum of the directors’ liability.
“The liquidators consider that the loss to creditors calculated in accordance with the Court of Appeal’s judgment will likely result in a material increase in the directors’ liability. As advised in our previous report, the Supreme Court granted leave for the directors to appeal and for the liquidators to cross-appeal the Court of Appeal decision.
“Consequently, the quantum hearing in the High Court was adjourned pending the determination of the appeals. The appeals were heard by the court between March 7 and 11, 2022.
The court had now reserved its judgment, the BDO liquidators noted yesterday.
The liquidators can’t say when they will finish the work on all the companies.
In a schedule of receipts and payments, they have funds on hand of $5.3m but have made total payments in the six-monthly period of $281,000 of which $194,000 has been legal fees.
Liquidators’ remuneration and disbursements totalled $52,000 in the six months to the end of February this year.
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