Ex-Hawkins firms owe $41m: Liquidator

Wind-down of construction companies leaves long list of unsecured creditors, with further investigation yet to come

It is too early to estimate what funds, if any, will be available for unsecured creditors. Liquidators’ report

About 1000 creditors are owed $41 million from construction companies formerly part of the Hawkins Group, liquidators say. In an unusually complex report covering 10 companies from the group, BDO’s Andrew Bethell and Andrew McKay outline a lattice of $400m in related-party lending and $37.5m owed for retention payments or to trade creditors.

Hawkins’ business was largely sold to rival Downer in March last year, but cashflow problems resulted in receivers being appointed to the remnants of the group this May.

A separate report by the same liquidators into related party H Constructions Schools 2 PPP — established to build four schools in Auckland, Queenstown and Christchurch — and H Construction North Island found unsecured third-party creditors were owed another $3.9m.

The vast majority of the unsecured creditors — a listing of which fills more than 10 pages of the report into the group of 10 companies — are owed by treasury company Orange H Construction and two H Construction companies established to manage projects in the North and South Islands respectively.

Outside of related-party loans payable, assets of the group and schoolbuilding company amount to $2.9m.

“It is too early to estimate what funds, if any, will be available for unsecured creditors,” liquidators say in their report.

Liquidators are yet to quantify the amount owed to secured creditors but noted they had been informed by receivers that “substantial amounts” were owed to parent McConnell Group — not in liquidation or receivership — under a general security arrangement.

The amount owing to preferential creditors — including Inland Revenue — was also yet to be confirmed.

Most of the business and assets of the group were sold to Downer for $60m, resulting in a winding down of the company’s New Zealand construction activities.

The remaining rump of H Construction North Island suffered a blow in the High Court in May, when it was ruled that it must pay $13.4m over leaky building defects at Botany Downs Secondary College. This sum is in addition to the $41m owed to other unsecured creditors. The company had previously been paid $28m to build the school.

Liquidators said they would review related-party transactions, and the sale to Downer, as part of their investigation.

More information about the financial structure of Hawkins is expected to come next week when receivers McGrathNicol — appointed to much of the group in May — publish their first report.

Weekend Herald requests for comment to David McConnell, director of all of the companies in the group and its parent, were not returned.

But in a statement last month, McConnell said the wind-down following the sale to Downer had been complicated when it took longer than expected to receive final payments for the groups’ projects, “creating a cashflow issue that resulted in Orange-H Group being placed in receivership”.

McConnell claimed there were significant assets in the group — including $20m owed by customers and $14m in cash-backed bonds — and his family’s interests were not expected to receive any recovery from the action.

Hawkins was founded in 1946 in Hamilton, and by 1951 was listed on the NZX. In 1983 it merged with McConnell Dowell, and was taken private in 1994 after being taken over by McConnell family interests.