Work has stopped on a number of Mainzeal developments around Auckland today.
The construction firm, one of New Zealand's largest, was placed into receivership yesterday and projects worth hundreds of millions of dollars have been left in limbo.
Security guards were posted outside the entrance of Shed 10 today, where the company had been doing a $14m upgrade.
Two Mainzeal staff were observed photographing materials and writing an inventory.
A PWC staff member at the site referred inquiries to head office, a block away on Quay St.
Work had also stopped at the Hobson Gardens apartment complex, and on the Manukau Institute of Technology's new building.
Mainzeal Property and Construction's receivership yesterday sent shockwaves through the building industry and put the income of hundreds of employees and subcontractors at risk.
The company was founded in 1968 and directly employs more than 400.
Industry sources said the flow-on effects would be major, particularly for the small businesses that largely make up the sector.
"It's bad news for subbies. Even if they do get paid ultimately, they can wait a long time," said one source.
Mainzeal is NZ's third biggest construction firm, behind Fletcher and Hawkins, and has been involved in $7.5 billion worth of projects, including Vector Arena and the Two Double Seven shopping centre in Auckland and the Supreme Court in Wellington.
It is building Manukau Institute of Technology's $95 million campus and the $14 million upgrade of Shed 10 on Auckland's Princes Wharf.
The firm has also been heavily involved in several major rebuilding projects in Christchurch.
Yesterday, receivers PwC - appointed at the BNZ's request - said Mainzeal's sole director, Richard Yan, had decided the company could no longer continue trading.
This was due to a "series of events that had adversely affected the company's financial position", combined with a general decline in commercial construction activity and lack of shareholder support.
The BusinessDesk news agency said it understood the receivership was over the failure to make a $1.8 million payment on an outstanding $20 million credit facility. This was "the last straw" in a string of difficulties the firm had faced in recent years.
Former directors of Mainzeal Property and Construction, including former Prime Minister Dame Jenny Shipley, issued a statement saying the firm had passed through a "very difficult year in the construction sector".
They said Mainzeal had contended with "the impact of legacy issues around leaky buildings, a large contract with disputed payments and a Chinese supply chain scheduling and delivery challenge".
On Tuesday, Dame Jenny was one of four directors who quit as board members of Mainzeal Group Ltd, which was not put into receivership.
In December, she and three other directors resigned from the board of Mainzeal Property and Construction, at the request of parent company Richina Pacific.
PwC receiver Colin McCloy said his firm was committed to doing the best it could for the suppliers, staff and subcontractors of Mainzeal.
Mr Yan and Mainzeal chief executive Peter Gomm were unavailable when the Herald visited their homes.
Unions are worried for members at Mainzeal and its subcontractors.
Ray Bianchi, of the Northern Amalgamated Workers' Union, said if Mainzeal couldn't pay subcontractors, it was very likely employees wouldn't be paid.
Like others in the sector, Mainzeal has been dogged by leaky buildings. It was carrying out $15 million of repairs on Hobson Gardens, the two-tower 97-unit block on Hobson St near Spaghetti Junction in Auckland.
Mainzeal built the complex, and negotiations over the repairs were protracted. It also built the leaky Botany Town Centre, currently under repair. It also faced legal action over other leaky buildings.
Fletcher Building executive Philip King said the receivership was a huge shock. Mainzeal's receivers would quickly turn their attention to unfinished jobs, he said.
"Where the contract is going satisfactorily, normally they want to see that completed because that is a source of value."
Read more:By Martin Johnston Email Martin, Nicholas Jones Email Nicholas, Bernard Orsman @BernardOrsman Email Bernard