Creditors face $6.9m loss from Harcourts’ Preet firms

Anne Gibson

Creditors of two of Harcourts’ Preet businesses are expected to be out of pocket by $6.9 million, according to administrators in charge of the real estate companies.

A report from administrators Jeff Meltzer and Michael Lamacraft of Meltzer Mason on the 10-branch Preet & Co Real Estate and Preet & Co Rentals showed the companies’ financial positions late last year, based on information from director Preet Grewal.

Secured creditors were initially listed in November as BNZ claiming $10.179m and Harcourts Group want- ing $1.2m, the report said. Unsecured creditors are Inland Revenue claiming $2.2m, Preet & Co Real Estate known trade creditors wanting $859,749 and Preet & Co Rentals’ known trade creditors wanting $20,817.

That gave a total of $14.5m but administrators have sold some assets and updated the financial position.

Accounts for Preet & Co Real Estate estimate a $5.2m shortfall, including bank debt of more than $1m and $1.7m owed to Harcourts Group. Accounts for Preet & Co Rentals estimate a $1.6m shortfall partly from $1.2m owed in bank debt and more than $150,000 owed to Harcourts Group.

The administrators told in their report how they had tried to sell the Preet businesses. An offer from a potential purchaser, at 2.5 times the annual fee income, was received, “but the purchaser was ultimately unable to raise funding”.

The administrators said the value of the real estate sales businesses was in the staff. “The main value in the business Preet & Co Real Estate was derived from the number of sales consultants who were retained by the company. The company’s income was generated from sales achieved by the consultants,” the report said.

Preet & Co Rentals’ value came from property management fees, dependent on property managers being retailed, the administrators said.

This had “an adverse effect on the interest shown by purchasers/ proposed purchasers. Interest effectively evaporated”.

The value of the real estate business has been negatively impacted by the loss of agents, the report said.

The administrators sold the assets of Preet’s real estate businesses in Howick and Pakuranga and Botany. They were all sold as going concerns and as Harcourts’ franchises, the report said. The assets of the Sharkey St business were also sold.

The administrators have realised assets of $2.59m.