By ANNE GIBSON
A loss of confidence in the New Zealand economy by Taiwanese investors is being blamed for yet another construction company collapse.
Equinox Construction, renamed GFF Ltd, went belly-up this week owing $1.4 million to creditors and $1 million to shareholders.
It told creditors it was short of cash and begged them not to take legal action.
But the plea for mercy went unheeded by one creditor, Plumtech NZ Ltd, which went public this week with its High Court application to have Equinox liquidated.
Earlier this year, Auckland builder Goodall ABL collapsed, owing $20 million.
That was preceded by the fall in 1998 of Wellington builder Voss Construction, owing $8 million.
GFF's Asian boss blamed the problems on losses on construction jobs and a withdrawal of funding due to New Zealand's poor economy, with GFF being bankrolled partly by wealthy Taiwanese investors.
This week GFF sent out a proposal to pay creditors between 24c and 33c for every dollar owed.
But that has left many creditors angry, having been told recently not to worry.
They received a written assurance in July from the chief executive officer of Equinox Group, David Drew: "The future of Equinox Construction is looking exceedingly bright," he wrote.
All its troubles were "now in the past" and everyone would get their money.
Now that Nigel Ainley, formerly of Hartners, had been appointed general manager, the firm's troubles were over, Mr Drew claimed.
But the story changed dramatically this week.
In a proposal for compromise between GFF and its creditors, director and shareholder Chong Du Cheng said it was better that an agreement be reached, rather than placing GFF in liquidation.
But he was too late, because an application to the High Court had already been made to have GFF put in liquidation.
Plumtech's application will be heard on November 16.
It is owed $88,473.90, GFF's accounts show.
GFF was to build a 20-storey tower with 183 luxury townhouses in a high-rise at 1 Hobson St in central Auckland. It was also building Eden Terraces, 83 townhouses in Enfield St, Mt Eden.
Chong Du Cheng told creditors that if the IRD agreed to make a write-off for GFF's GST liability, the payout might rise by 8c.
But for the scheme to work, GFF creditors would have to agree to a moratorium: "If the compromise is not approved and the company is liquidated, these creditors will receive a substantially lesser or no dividend," GFF threatened.
To manage the compromise, GFF has appointed accountant Nigel Milton of BDO, Manukau.
Creditors get their chance to vote on the deal on October 30 at the Institute of Chartered Accountants.
Worried industry observers said GFF's collapse could have wider implications for the building business, as it is linked through Chong Du Cheng to Equinox Capital, which has financed other Auckland building developments.
David Henderson of Kitchener Group announced yesterday that he had bought 1 Hobson St from Oblique, a company associated with GFF, for $6 million.
Pre-sales of about 120 apartments had been made, he said.
The deal has enraged GFF's creditors, who accused it of selling assets when it was in trouble.
The general manager of Equinox Construction was Trevor Griffiths, who Mr Drew said in July had resigned. It was Mr Griffiths who had predicted Equinox Construction would have a $100 million turnover in three to five years: "We have a heap of predictions at the moment - God help us!" wrote Mr Griffiths in an article published in Progressive Building magazine last year.
But cynical industry observers said this week that it was now the creditors who would benefit from some divine assistance.
Big promises turn to acrimony
AdvertisementAdvertise with NZME.