The future of a residential building company with unfinished houses in Hamilton and Auckland is unclear today, with creditors owed millions of dollars.
Starplus Homes, a building company based in Hamilton and South Auckland, ceased trading this week and could owe as much as $20 million, insiders say.
The Herald understands staff were told over the weekend not to come back to work and signage from up to 12 partially built homes in Hamilton were taken down leaving homeowners in the lurch.
It's believed Starplus has another 60 projects half completed in South Auckland including at subdivisions in Takanini and Papakura.
The largest creditor, Mitre 10 Mega Hamilton, could be owed as much as $5 million.
Owner Terry Wilson would not confirm an amount but said Starplus was a significant customer of the business.
Wilson said it was too early to speculate whether the company would be put into receivership or liquidated but he was working on putting together a scheme of arrangement to finish the houses.
The Starplus Homes website hosts a link on Trade Me to 27 houses for sale or to be built, mostly in South Auckland, with a combined value of more than $13 million.
An industry insider said at least $5.5 million was owed to primary creditors, with more to secondary creditors including one tradesman who was owed $130,000 for sub-contracting work.
Starplus Homes was known for building houses at cut rate prices of up to 15 per cent cheaper than other building companies.
One subcontractor owed about $12,000 for supplying materials on housing sites at Addison in South Auckland said the Auckland Starplus office at 42 Ormiston Road, East Tamaki had shut and he could not contact people about an outstanding bill.
Nigel Richards, Auckland-based McConnell Property general manager, said he also knew of outstanding bills and people who wanted to be paid for their work at Takanini's Addison but he warned against leaping to any conclusions about the situation because he said nothing official had happened.
Addison was also just one of a number of land development projects by McConnell and Starplus was just one of 13 group house builders which had bought Addison sections, Richards said. McConnell sells the sections to builders like Starplus which then puts together house and land packages for home buyers.
A subcontractor owed money told the Herald people were particularly worried after Mainzeal Property & Construction suddenly went under on Waitangi Day and that Starplus was active in the South Auckland area on many different sites.
"I rate my chances of winning Lotto ahead of getting paid," he said.
Owner Richard Zongyan Lee was one of several Hamilton building company owners who came under fire in early 2011 after complaints of shoddy workmanship surfaced around using Chinese immigrant builders.
But Wilson said Lee was an "honourable" man who was doing everything he could to make sure creditors get paid.
Wilson planned to meet with other creditors to work out how to mitigate the loss and "get the best outcome for everyone".
He believed the company, which had one of the highest residential home building rates in the Waikato, had grown too big too fast.
"I think it's probably fair to say it's a company that's pretty asset rich and cash poor."
Starplus Homes began building houses in Cambridge in 2007, constructing 36 in the Waikato in 2010.
Another insider said at one stage recently the company had 100 building projects in progress.
Wilson rubbished claims Starplus houses were poorly built.
"What I can say categorically is that our experience with Starplus is a very high quality product."
Lugton's Real Estate managing director David Lugton said Starplus Homes had negotiated terms on five Lugton's sections in a new North Hamilton subdivision.
However he said if Starplus could not settle the $170,000-plus sections by July, liability would fall to a nominated purchaser.
He said the situation was unfortunate for Starplus and its clients who were left with incomplete houses.
"My guess is that they probably were overtrading. They probably didn't have the financial facilities to do the amount of business they were doing."
Hamilton City Council confirmed it knew of the situation but had not official notification.
Building review and operations manager Cory Lang said the council had no information on projects in progress or how they might be completed.
"This would only be determined if receivers were appointed."
Lee and several of his staff did not return messages left by the Herald.
His lawyer Geoff Hanlon would not comment.