Mainzeal liquidators to pursue director
A High Court decision has allowed bankruptcy proceedings to continue against Mainzeal’s remaining director, Richard Yan.
Yan and three former directors of the failed construction company were ordered by the High Court in February to jointly pay $36 million in penalties for breaching their duties.
They are all appealing but the insurer of the other three directors, including former prime minister Dame Jenny Shipley, has put $18m into trust while that appeal continues. However, Yan is resisting putting up security for his $18m share.
At the High Court in Auckland on Wednesday, Mainzeal liquidators BDO were given permission to apply for Yan’s bankruptcy.
A source said Yan could post security but this would effectively admit he had access to funds. Yan contends he has no assets. If Yan goes bankrupt, the liquidators can ask for his New
Zealand assets to be sold. He has been linked to a property near Oamaru, and two Auckland properties.
Mainzeal Property and Construction Ltd was put into liquidation in 2013, owing creditors more than $110m.
Many subcontractors suffered from the collapse and some subsequently went into liquidation as well.
As the Mainzeal directors challenge the penalties they face, BDO has cross-appealed, asking the court to lift the amount from $36m to at least $73m. BDO has argued the former directors ‘‘exposed the creditors to illegitimate risk by using creditors’ money to continue trading while insolvent for a number of years’’.
Mainzeal, once listed on the NZX, was bought by Yan’s company, REH Capital, in the early 2000s. Mainzeal’s new parent company, Richina, then borrowed millions of dollars from Mainzeal but did not help Mainzeal when it struck financial difficulties.