Directors face probing questions as Nosh ‘disaster’ investigated

The liquidators of the former gourmet supermarket Nosh are investigating alleged breaches surrounding the multimillion-dollar collapse of what was a ‘‘genuine new Zealand business success story’’.

The investigations were confirmed after a debt-buying company called for liquidators to ‘‘take a very hard look’’ at the actions of directors.

Nosh was sold by NZX-listed Veritas Investments to a consortium of local investors earlier this year for a $2.6 million loss. This was after Veritas’ bank, ANZ, had forced the company to look to sell the troubled supermarket chain in order to repay some of its debt.

The company which bought Nosh, Gosh Holdings, has since gone into receivership, and the previous owner of the brand, Old NGL, went into liquidation last week.

Liquidator Shephard Dunphy’s first report said the 150 creditors were owed about $1.6m.

Veritas’ sale of Nosh had been structured so the new owners would take on the debt of unsecured creditors, but after these went unpaid, Veritas obtained a court judgment against the owners for $1.9m

Last week, however, Veritas said it was unlikely this would be paid.

Debt-buying company and litigation funder Bishop Warden this week asked the liquidators of Veritas-owned Old NGL to call a meeting of creditors after the Shephard Dunphy report said there would not be one.

Bishop Warden director Matthew Blomfield said this was because his company wanted to appoint a liquidator which would investigate and ask questions of the directors.

‘‘Bear in mind that in 2014, Nosh Group appeared to be a genuine New Zealand business success story,’’ he said.

‘‘We need a liquidator prepared to take a very hard look at these directors’ actions, what they knew, when, and whether there is any possibility of sheeting home some liability for this disaster.’’

Shephard Dunphy insolvency manager Jessica Kellow said it was usual for liquidators to dispense with a meeting of creditors because of the cost.

But since their appointment last week they had received several requests for a meeting and this was likely to be held in the last week of September.

Kellow said she and co-liquidator Iain Shephard were accredited insolvency practitioners with vast experience dealing with liquidations and claims for breaches of directors’ duties.

‘‘We have already commenced our investigations into the alleged breaches.’’

Veritas chairman Tim Cook declined to comment.

Last week, Veritas said ANZ was withdrawing its banking facilities when they fell due in October and November.

This created ‘‘material uncertainty’’ for the company, which owned the Mad Butcher and Better Bar Company franchises, and its ability to continue.

As a result, Veritas was looking at a potential sale or merger, raising capital or refinancing with alternative banking arrangements. The directors of the company were confident of a solution.

‘‘The directors acknowledge that if the group is unable to obtain alternative sources of funding, within the required timeframe to enable the repayment of the bank debt, or receive an extension of timing of debt repayments to the bank to enable the group to execute any of the above options, then the going concern assumption would not be appropriate.

‘‘Whilst material uncertainties exist, the directors consider that there is a reasonable expectation that the above options can be executed and that the ANZ will support the group through this process.’’