Mainzeal liquidator receives $151.3 mln in unsecured creditor claims
By Paul McBeth
Sept. 24 (BusinessDesk) - The liquidator for the failed Mainzeal group of companies has received $151.3 million in claims from unsecured creditors, and is working its way through the applications as it looks at ways to claw back funds for those people left out of pocket.
BDO's Brian Mayo-Smith, Andrew Bethell and Stephen Tubbs are sifting through the unsecured creditor claims and considering how best to recover funds, according to their latest report on the failed construction group.
All of the $5.3 million owed to employees at Mainzeal Property & Construction has been repaid, while of the $300,000 owed to employees at King Façade, the remaining 30 percent will be repaid in October. Inland Revenue has a claim of $2 million, the liquidators said.
The Mainzeal liquidators 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 May, 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 statement of affairs based on that information showed assets of $63.3 million, of which $55.4 million were related party loans to MLG Trading and $7.8 million related party loans to Isola Vineyards. The report showed total liabilities of $24.3 million, of which $5.8 million was owed to related party King Façade, $15.2 million owed to Mainzeal Property & Construction and $2.5 million owed to Richina Building.
The liquidators said they are looking at other recovery options open to them as a result of the Appeal Court decision, and had received $290,000 over an RGRE debt. The administration had funds on hand of almost $2.79 million as at Aug. 27.
In their April report, the liquidators 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.
In their latest update, the liquidators said have reviewed transactions of the companies within two years of their appointment, and "will be pursuing all recovery options available to us where we consider there is a benefit to creditors in doing so."
They reiterated that any quantum available to unsecured creditors will rely on their ability to "achieve significant recovery from potential actions that may be available to them" and if they fail, any return isn't likely to be substantial.
The liquidators have received the reaming contract receivables from the Mainzeal receivers, who were appointed by the Bank of New Zealand, with 38 active and 60 inactive contracts. Of those, they agreed it was more efficient for the receivers to work through two projects that were in progress and will assess the remainder on an individual basis.
"We expect that the recovery from contract receivables will be significantly lower than the book value" but will pursue "all recovery options available to us where we consider debts to be due and payable," the report said.
The liquidators' next steps including completing their investigations into the various companies' affairs, pursuing the recovery of related party debts, completing the review of unsecured claims, reviewing any potentially voidable transactions, and distributing any available funds to unsecured creditors.
Mainzeal Property & Construction and Mainzeal Living were tipped into receivership on Feb. 6 last year, the Waitangi Day public holiday, 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.
Former Prime Minister Jenny Shipley and former Brierley Investments chief executive Paul Collins resigned as directors of Mainzeal Property & Construction in December 2012, at the request of Mainzeal and Richina group principal Yan. They remained directors of Mainzeal Group until just before the MPC receivership.