Two companies associated with the Fiji Beach Resort & Spa managed by Hilton are in receivership.

They are Denarau Investments and Denarau International.

The Hilton is continuing to operate the 160-villa resort on Denarau Island but completion of the property's expansion with an extra 90 villas is now in doubt.

Neville Mahon, the resort's Auckland-based developer, warned last month of impending trouble.

This week, he said two financiers were behind the decision to appoint a receiver.

Mahon told villa owners, who live mainly in New Zealand and Australia, how the situation arose.

"On August 12, I wrote to BoS International [Australia] as the senior lender and first charge holder of the Fiji Beach Resort & Spa project requesting the urgent appointment of receivers to Denarau International and Denarau Investments.

"I received advice from BoS that on September 8 Strategic Nominees under instructions from BoS appointed Grant Graham and Brendon Gibson of KordaMentha, Auckland, as receivers and managers of all of the assets of each of Denarau Investments and Denarau International.

"I will be working closely with the receivers to provide them with all the assistance that I can and to introduce new finance to the project to allow it to be completed. I will be doing all that I can to achieve the best outcome for all parties including villa owners," Mahon wrote.

Previously, Mahon had offered to repay Strategic Finance $55 million over four years without interest, a deal the financier rejected. BoS provided a $45 million facility and Strategic became second mortgagee when that happened last April.

Rob Campbell, the Viaduct Harbour businessman who heads the Villa Owners' Representative Group, said receivership was regrettable. "The appointment of a receiver is disappointing after all the hard work and inspiration which Neville Mahon has put into developing the leading resort at Denarau.

"Villa owners who have invested there, as well as resort guests, enjoy a fantastic environment. As villa owners we expect this will continue under the receivership of the Denarau businesses as Hilton is unaffected. The most important thing now is to establish a sound financial and management base.

"We have remained in touch with the receivers in anticipation of this and have formally recorded our interest on behalf of villa owners. Villa owners are substantial creditors in terms of income not received under our contracts and any future financing and management structure will require villa owner participation and consent. We will be working positively with the receiver to this end and we certainly have no intention of letting the lenders or anyone else disadvantage villa owners."

The Villa Owners' Association, which claims to represent a larger number of people than Campbell's group, said receivership was inevitable.