Liquidators are preparing court action against the Rugby World Cup's main security operator, Darien Rush Security.
The company bought the key Cup contract off a failing company, Strategic Security, but, according to Strategic liquidator Dennis Parsons, is yet to pay a cent.
Mr Parsons told the Herald he was "ready to go" to recover up to $2.5 million from Darien Rush Security, which is now responsible for crowd control at Eden Park and North Harbour Stadium.
Darien Rush Security bought the assets - including the contract and staff to run Eden Park - from Strategic Security, which is in liquidation with unpaid taxes and other debts.
Through a public relations firm, Darien Rush Security said last night it "did not owe any money in relation to the Strategic Security deal".
Previously, the security firm said it was not liable for Strategic's debts because it only bought its assets.
Rush Security Services, which now trades as Darien Rush Security, was formed in 2005 as an alarm system company, according to Companies Office documents.
It was embroiled in a dispute with the Newmarket Business Association five years ago over the installation of a CCTV security system and came to a confidential settlement, said the association's then-chief executive, Cameron Brewer.
In 2008, Darien Rush Security took over Magnum Security, a patrol company, in a bitterly contested purchase.
Magnum's owner, Bill Frost, claimed he had received a deposit but no other payments.
Darien Rush said there was misrepresentation and a lack of disclosure from Magnum about the purchase, according to Mr Frost.
Mr Frost said he was preparing to sue Darien Rush Security, including for damages.
Mr Frost was left with tax liabilities and put in home detention for six months. He lost his house and became separated from his wife and two children, aged 9 and 10.
Darien Rush Security got the Eden Park security contract in a buyout of Strategic Security in March last year.
Of Strategic's two directors, Jason Brott has become Darien Rush Security's chief operating officer, while Alistair McGinn has lost a house, work, and the company that was to set him up for retirement.
Mr McGinn founded Strategic Security about six years ago after moving from Britain. He has now left Auckland with his wife and three daughters.
"It's been enormously stressful. Phenomenally so," said Mr McGinn.
Strategic Security has been put in liquidation owing $2 million, including $757,000 to one of the World Cup's main sponsors, ANZ Bank, $660,000 to Inland Revenue and $615,000 to four other creditors.
The liquidator, Mr Parsons, said Darien Rush Security had failed to pay for the purchase of Strategic. "He bought all the assets, all the staff, and all the technology - and hasn't paid a cent for it. Not one dollar."
Mr Parsons said the agreed sale price had been $2.5 million and creditors wanted Darien Rush Security to meet its obligations so the debts could be paid off.
"Is Mr Rush not responsible for the debt? Well, maybe not. But he's not paying the bills that would allow these debts to be paid."
Darien Rush Security says the value of Strategic was misrepresented during the purchase, according to Mr Parsons.
"We disagree, simple as that. You're getting some value. The question will come down to how much value. So the matter is going to have to be dealt with before the courts," Mr Parsons said.
"I have no doubt that Mr Rush is going to have to pay more than nothing. Our proceedings are all drafted; we are ready to go."
Darien Rush Security was responsible for crowd control at last November's Four Nations rugby league match attended by 44,500 fans, in which bottles and missiles were thrown at players and spectators.
As Eden Park's security provider, Darien Rush Security was this year given more major contracts by the Auckland Council, including Vector Arena and North Harbour Stadium, making it the key security operator for the Rugby World Cup and its 85,000 international visitors.
The council has investigated the risks of doing business with the company, but is refusing to disclose the findings.
Rugby NZ 2011 head of security Gavin McFadyen has said that tournament organisers have tested security arrangements and were satisfied.By Michael Dickison Email Michael