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Subcontractors call on Mainzeal liquidators to open books
Media release
8 March
2013
Subcontractors call on
Mainzeal liquidators to open the books
The Specialist Trade Contractors’ Federation
(STCF) has called on the Mainzeal liquidators to “open the
books” and reveal how much the companies hold in retention
payments.
Retentions are a widespread building and construction industry practice where a construction firm withholds part of a sub-contractor’s total invoice, unsecured and without interest, for up to two years after the subcontractor has completed their work.
STCF president Graham Burke said that it was likely that Mainzeal was holding millions of dollars in retentions and called on liquidators BDO to be transparent about the sums.
“This is money that belongs to sub-contractors and would have been paid out to them in due course but, because sub-contractors are unsecured creditors, it is likely that this very significant sum will be used to pay secured creditors.
“When Alliance Construction was placed into liquidation last year, the liquidators disclosed that it was owed $600,000 in retention payments but owed over $1.5 million in retention payments to subcontractors.
“Given the significantly larger sums involved here and the high numbers of sub-contractors affected it seems reasonable that BDO should take a similarly transparent approach and disclose, in their report, the full extent of sub-contractors’ money retained.”
The Federation has called for urgent changes to the practice of construction firms holding retention payments, in the wake of the Mainzeal collapse, either in the form of security for retentions held or the introduction of an alternative system, such as bonding.”
ENDS
The Specialist Trade Contractors’ Federation represents the specialist trades and contractors who are the backbone of the building and construction industry.
STCF members include the
representative bodies of contractors responsible for
painting, plumbing, gasfitting, drainlaying, scaffholding,
climate control, reinforcing, roofing, precast concrete,
ceilings walls and linings (see nzstcf.org.nz for a full
list of members).
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