Court to act on True Line

THE District Court has been called in to assist with the liquidation of a Queenstownbased building company and further action may be taken against its director in the High Court.

True Line Builders Ltd, a residential building company with projects in Queenstown, Auckland and Great Barrier Island, was put into liquidation on July 25 last year.

In his second report, liquidator Imran Kamal, of Liquidation Management, said he had since interviewed director Jaden Melgren and investigated the ‘‘books and records of the company’’ to see if there were any breaches of the Companies Act 1993.

‘‘The liquidator has some concerns regarding the manner in which the business was conducted and the substantial loss suffered by creditors.

‘‘The liquidator is yet to decide on the best course of action to take against the director.’’

When asked, Mr Kamal said it was ‘‘too early for me to comment’’ on what the potential breaches were or what his concerns were.

However, he said proceedings against Mr Melgren for breaches of director’s duties might be taken against him in the High Court.

Shareholders of the business were Mr Melgren and his wife, Jackie Melgren. However, Mrs Melgren was removed as a shareholder the day before the company was placed into liquidation.

Mr Kamal had since reconstructed the shareholders’ current account and an investigation revealed a debt owed to the company by the shareholders.

He told the Otago Daily Times the amount owed was ‘‘confidential’’.

Urgent proceedings were filed in the District Court to seek judgement on the debt, and subsequently a settlement had been negotiated and a Deed of Settlement executed.

‘‘The shareholders have started a payment and the liquidator is monitoring this closely.’’

Mr Kamal was still to determine what further action to take in relation to company assets, namely tools, which had been hidden by creditors who were claiming lien over them.

Tools in Queenstown had been ‘‘illegally taken by creditors’’ and Mr Kamal had not been able to retrieve them.

He had subsequently filed a Disputes Tribunal Application and the referee determined it should be heard at the High Court.

‘‘As this will inevitably incur further cost, the liquidator is yet to determine what further action to take.’’

An overdraft, secured against the director’s personal residence, was settled after a mortgagee sale of the property.

Mr Kamal said he liaised ‘‘at length’’ with owners of homes being built at the time of liquidation and ‘‘unfortunately there are no funds to complete the builds as the company was insolvent. Further, the building owners do not owe any funds to the company.’’

The company’s lease in Queenstown had been disclaimed and the liquidator had not been able to collect any accounts receivable because most of the amounts owed were paid in advance, or disputed.

The IRD and six other creditors had filed a preferential claim totalling $183,315.26 and the liquidator had received 22 unsecured creditor claims totalling $609,901.21.

‘‘Any prospect of a distribution to the creditors is dependent upon the quantum of the recovery of the overdrawn shareholders current account.’’

The sales of office furniture, vehicles and tools had realised $87,492.39, all of which had been paid out — the majority, $61,307.45, to secured parties for vehicles.

Mr Melgren incorporated a new company, Melcon Ltd, on August 1, of which he was the sole director and shareholder, intended to be a ‘‘labour hire setup’’ for the commercial sector in Auckland.

It was subsequently removed from the Companies’ Register on November 20.