Significant shortfall for subbies in Ebert receivership
By Victoria Young
July 22 (BusinessDesk) - Receivers for Ebert Construction have dished out another $770,000 to subcontractors, bringing total distributions to them to $2.31 million since the firm’s collapse last October.
The distribution of funds following Ebert’s collapse is being closely watched in the construction industry as the first major test of the subcontractors’ retention regime. Since March 2017 it has been compulsory for construction firms to hold money on trust for subbies.
When Ebert moved into receivership its accounts showed $3.68 million was held in retentions, despite also recording $9.32 million owing under the retentions scheme.
Pointing out that retentions may be the only recovery for many subcontractors, receivers at PwC said in their latest report that it has been an extremely difficult situation for many people.
“We are conscious that most subcontractors are likely to experience a significant shortfall for their wider claims for unpaid works of retentions not held in the fund.”
PwC receivers John Fisk and Lara Bennett made a pioneering application to the High Court at Wellington last year to work out how to distribute the funds.
In his ruling, Justice Peter Churchman noted that the retentions were the receivership's only significant cash asset.
According to their July 15 report, the receivers had reached agreement with 126 of 130 subcontractors on how to treat their claims.
There were 182 subcontractors but only about 70 percent of them qualified for retentions for a variety of reasons, including that some had been mislabelled.
Total distributions to subcontractors under the retentions scheme now total $2.31 million, or 90 percent of accepted claims, after $1.54 million was paid out before Christmas. While some of the remaining $1.88 million left in the retentions fund will go to subcontractors, the receivers will have to pay their expenses and legal costs.
Approximately $108 million is believed to be owing in the liquidation, the most recent report from April this year said.
While the company’s accounts payable balance was $24.52 million, the liquidators - BDO - identified several large breach of contract claims from project owners. BDO’s Iain Shephard and Jessica Kellow had not accepted or rejected any claims, their report said.
The liquidators had formed a preliminary view that there might have been a breach of directors’ duties and had notified the directors of a potential claim.