By Nikki Mandow
March 25 (BusinessDesk) - Richard Yan, director of failed construction company Mainzeal Group, has appealed the High Court judgment which found him liable to pay up to $36 million to creditors.
Tomorrow is the deadline for any appeals in the case, following Justice Francis Cooke’s ruling released on Feb. 26. It’s not yet clear whether the three other directors, including former Prime Minister Jenny Shipley, plan to appeal.
Liquidator BDO, appointed after Mainzeal collapsed in early 2013, could also choose to appeal on the grounds that the sum awarded to creditors is only a third of the approximately $110 million they are owed. However, given Yan’s appeal, BDO now also has the option to cross-appeal within 10 working days.
Mainzeal chair Shipley and directors Peter Gomm and Clive Tilby were found liable for up to $6 million each, with Yan potentially liable for the full amount, $36 million.
Justice Cooke ruled that the three directors were reckless, “had adopted a policy of trading while insolvent”, and “used money owed to trade operators, particularly sub-contractors, as working capital.”
The directors also relied on assurances from Mainzeal’s China-based parent, Richina Pacific, headed by Yan, that the millions of dollars Mainzeal had lent Richina would be paid back if Mainzeal got into trouble.
“The assurances relied upon were ambiguous, conditional, and subject to the constraints of Chinese law, which restricted the ability to return money to New Zealand from China,” Justice Cooke said in the judgment.