Podular Housing Systems failure likely to hit $5.2m

The financial failure of Auckland offsite residential builder Podular Housing Systems has been estimated at $5.2 million, making it one of the largest collapses in the modular housing sector.

The first report on the Wairau Valley-headquartered company from liquidators Benjamin Francis and Simon Dalton of Gerry Rea Partners estimated a $5.2m deficit.

The report also identified more than $2m in deposits paid by customers whose homes weren’t started.

“The deposits were held in the company’s general account and do not appear to have been spent for the purposes for which they were paid,” the liquidators’ said.

“This bank account was overdrawn at the commencement of liquidation and, as a result, there is no ability for customers to trace their deposits. The liquidators will be investigating this matter and taking appropriate steps.”

Francis and Dalton also raised questions about how Podular was being run, noting “concerns regarding the conduct of the management of the company”.

The Herald highlighted the plight of some Podular customers last month, including Wellington doctors Kathryn Percival and David Pirotta who are estimated to have taken $500,000-plus losses. Podular was to build their modular home in its factory, then deliver it completed to their Marlborough Sounds property within months. Plans were finalised last August, yet they still don’t have their house.

The liquidators said unsecured creditors were owed an estimated $2.7m, Inland Revenue $1.1m and employees $330,000. They can’t say when they will finish work or if anyone will get any money.

They noted that income didn’t cover operating costs and funders wouldn’t loan more money. The company was unable to continue to trade and its shareholders Ilan Gross, of Grey Lynn, and Charles Lewis Innes, of Mt Eden, called in liquidators.

Before the failure, they tried to find buyers but no offers were received, the liquidators said. They said they had received “a significant number of inquiries” from affected customers and were working through those.

They didn’t say exactly how many house buyers were affected. The Herald has reported on six cases so far.

“The liquidators are working with our legal advisers to assess the priorities between the competing interests and will liaise with the impacted parties directly. Work has paused on all ongoing contracts. We are currently assessing the status of these contacts.

“The liquidators have not engaged in any discussions with any party regarding the sale of the business or contracts. Such actions would be premature until the legal status and circumstance of each client is clarified,” they said.

All employment contracts had been terminated.

The liquidators said a meeting of creditors will be held at 10.30am, December 13, in Auckland.