$10m spent on Mainzeal liquidation
THE liquidators of collapsed builder Mainzeal have chalked up an estimated $10 million bill for legal and financial services since the builder went under six years ago.
Brian MayoSmith, one of the BDO liquidators of Mainzeal, has defended the bill, saying they were faced with unravelling an ‘‘elaborate’’ situation between New Zealand and China.
‘‘The collapse of Mainzeal in 2013 left the liquidators to unravel the very elaborate and convoluted corporate dealings between New Zealand and China that the directors had allowed to occur. This required significant expense by the liquidators to work out what had happened,’’ Mr MayoSmith said.
BDO had started legal proceedings in 2015, backed by a liquidation committee representing creditors. That was a move to hold the directors to account for their ‘‘wrongdoing’’, he said.
The exdirectors will file an appeal of the High Court’s judgement in relation to the collapsed construction company case. They believed they had strong grounds to challenge the decision, their lawyer, Jack Hodder QC, said.
However, directors — former prime minister Dame Jenny Shipley, exchief executive Peter Gomm and Tauranga man Clive Tilby — are challenging a High Court ruling against them.
Former Mainzeal head Richard Yan is challenging an $18 million New Zealand bankruptcy proceeding against him over the collapse of the business, saying this country’s laws do not apply in China, where he now lives
The directors were collectively held liable for reckless trading and ordered to pay $36 million.
A Herald source expressed frustration that the liquidation was costing so much when creditors were unlikely to receive a meaningful return.
‘‘So even if they get back $18 million from directors, $10 million of this has been wasted on legal and mainly BDO fees. And $111 million is owing to creditors, who are likely to get a tiny amount, if anything.’’
Liquidator reports from BDO show amounts of around $500,000 were being spent each six months on liquidation and consulting, plus legal fees.
But Mr MayoSmith indicated it was a long, hard fight to win the first leg of the battle, now under appeal.
‘‘The case was defended by three sets of directors [Shipley, Gomm and Tilby], who were each represented by their own QCs and law firms, making the legal process lengthy and expensive.
‘‘The liquidators intend to continue to pursue the case to maximise the recovery for the creditors, including seeking the securing of the $36 million judgement made by the High Court and pursuing the appeal seeking an increase in damages to $76 million and joint and several liability from the directors for their actions,’’ Mr MayoSmith said.