Receivers of insolvent labour recruitment business ELE, whose 1000-plus staff were sacked just before Christmas, are paying $4.1 million in wages and holiday pay and have fully repaid the BNZ.
Deloitte issued an update on five ELE businesses: ELE Holdings, ELE Management, Tranzport Solutions, RISQ New Zealand and ELE Security.
“There were in excess of 1000 employees, owed circa $4.1m. To date we have been able to make an interim distribution to these employees of their entitlements of approximately $1.3m, equating to 35 cents in the dollar,” said the report, issued on August 20.
A further $2.8m was owed to those former staff and further distributions would be made as funds became available and any issues of entitlement to funds held were resolved, the report said.
The report covers the period from December 20, 2023, to June 20, 2024.
Assets are being realised to pay the staff and others.
Workers were pleading with Deloitte for part-payment earlier this year, with one ex-staffer saying he was being forced to sleep in his car.
It’s better news for the BNZ.
“The secured lender, by whom the receivers were appointed, has received payment in full of its liability owed by the group, through collection of debtors over which it had specific security and from other entities in the group under guarantees provided.”
The assets of the businesses were predominantly accounts receivable and fixed assets, namely motor vehicles.
ELE, founded by Tauranga’s Brent Mulholland, had substantial work in progress when it went into receivership in December.
But it had not issued invoices for all the money it was owed, the report noted.
So with the support of various ELE staff employed by ELE Management, that process was undertaken to invoice the work-in-progress and collect the proceeds, the Deloitte report explained.
Collection of the accounts receivable ledger had been a significant exercise, as about 200 debtors had outstanding balances, with the majority being in the construction industry.
A significant number of debtors were unable to pay their outstanding balances on time, leading to payment plans being agreed.
Some debtors also disputed the amounts said to be owing.
“Where possible, the receivers have pursued debt recovery action, agreed repayment plans or have pursued liquidation proceedings against several debtors that were insolvent. As of the date of this report, the receivers have collected approximately 85% of the total outstanding debtors in the receivership,” the report said.
The ELE Group also held a trade credit insurance policy.
A substantial amount was outstanding from three debtors for amounts invoiced before and after receivership. These debtors had not paid, so the receivers successfully petitioned for the liquidation of those companies and subsequently made claims under the insurance policy.
Outside of the period covered by the report, one claim had been accepted with funds expected imminently and two more claims were pending, Deloitte said.
Further, ELE had 30 vehicles, which were sold privately or auctioned.
In February, Deloitte issued its first receivers’ reports on the five companies, revealing claims by creditors of $12.3 million.
The biggest failure was ELE, which had $10.8m of claims.
Secured creditor the BNZ claimed $5.77m.
Some claims from other secured creditors Carters Building Supplies, De Lage Landen, Bridgestone New Zealand and PlaceMakers Christchurch had not been confirmed earlier this year.
Inland Revenue was owed $1.05m, Deloitte said earlier this year.
The latest report said the collection of debts and repayments was ongoing. Another report will be issued in about six months.