The liquidators of the Mainzeal Group of companies have racked up $523,000 in legal fees since taking on the administration, as they face several court battles with the failed construction firm's principal, Richard Yan.
BDO's Brian Mayo-Smith, Andrew Bethell and Stephen Tubbs are seeking about $46.6 million in related party debt stemming from two significant restructures in the two years leading up to Mainzeal's collapse, as they try to claw back funds to pay unsecured creditors. The legal fees have been the biggest cost on the liquidation between Aug. 28 and Feb. 27, followed by $492,000 in liquidators' remuneration, according to their latest report.
They were appointed liquidators of related-party Richina Global Real Estate by the High Court on Feb. 27, a ruling Yan is appealing despite the Court of Appeal declining a bid to stay the application. The liquidators in turn are appealing a decision not to appoint them over another related company, Isola Vineyards.
"The challenges have caused delays and increased the costs of the liquidation," the report said.
They reiterated that if not successful in achieving a significant recovery from the related party loans, then any distribution to unsecured creditors "is not likely to be substantial."
Last year, the receivers for Mainzeal Property & Construction, David Bridgman and Colin McCloy of PwC, said they expected to have surplus funds for the liquidator of the Mainzeal group. Today's liquidators report shows $1.1 million was surplus from the receivership.
The liquidators represent unsecured creditors who have lodged claims worth $139.3 million, and they expect there are still more to come. The receivers were appointed by Bank of New Zealand, which was owed $11.3 million, the bulk of which was over the Mainzeal headquarters building on Auckland's Victoria St.
Mainzeal Property & Construction and Mainzeal Living were tipped into receivership on Feb. 6, the Waitangi Day public holiday, and 200 Vic joined them on Feb. 13. Liquidators were appointed to the Mainzeal group later that month on Feb. 28.
Former Prime Minister Jenny Shipley and former Brierley Investments chief executive Paul Collins resigned as directors of Mainzeal Property and Construction in December 2012, at the request of Mainzeal and Richina group principal Yan, an Auckland-based businessman. They remained directors of Mainzeal Group until just before the MPC receivership.