The liquidators of Cherri Global have released their latest report into the state of the business's collapse. Photo / Duncan Brown
The Government is likely to be the largest external creditor of Cherri Global - a Hawke’s Bay cherry grower which went into liquidation owing nearly $43 million to creditors.
While most of the debt - $41.27m - is owed to related parties, the Ministry of Business, Innovation and Employment, has confirmed it is owed the majority of the external debt.
Cherri Global and its subsidiary companies, Cherri Holdings and Cherri Machinery, were put into liquidation on March 8 through a special resolution of shareholders, with Janet Sprosen and Stephen White of PricewaterhouseCoopers New Zealand appointed liquidators.
In their first report, the pair said the three companies faced challenges following the impacts of Cyclone Gabrielle and an unsuccessful attempt to raise new equity to fund the development of the orchards.
This led to the business selling the majority of its property assets and operations, subsequently ceasing trading in November 2024 following the sale.
Now six months into the liquidation, Sprosen and White have confirmed that the companies owe a combined $42.92m. However, $41.27m of that figure is owed to related-party creditors, including amounts owed between the companies.
Cherri Holdings owes a total of $24.92m to creditors, split between $10.89m to external creditors and $24.9m to related-party creditors.
Cherri Global owes the next largest amount, with $11.27m owed to related-party creditors. The remaining $1.62m is owed to external creditors, including the Ministry of Business, Innovation and Employment (MBIE).
Cherri Machinery, meanwhile, owes $5.1m to related-party creditors, with $8464 owed to external creditors.
Since their initial report, Sprosen and White have received the companies’ bank statements for the two-year period prior to the liquidation, which weren’t previously available.
The pair have also sold a majority of the companies’ assets through an on-site auction, providing net proceeds of $89,000 after deducting sales agent and related costs.
However, several assets subject to security interests which were included in the auction process failed to sell, and have been collected by the relevant secured creditors.
As for the companies’ debts at the date of liquidations, Cherri Global Limited was owed $175,288, Cherri Machinery Limited $93,301 and Cherri Holdings Limited $397,936, totalling $666,525.
Liquidators did collect $97,248 during the reporting period, and are currently holding the funds in trust before they are transferred to the liquidators’ trust account in due course.
The liquidators’ investigations have identified certain claims against third parties which they are in the process of advancing, with any details to be provided in future reports.
Sprosen and White said they were unable to comment on the likelihood of a distribution to preferential and unsecured creditors.
The three companies have several large creditors among them, including Spark and Manawa Energy, however a significant amount is owed to MBIE and Kānoa – the Regional Economic Development & Investment Unit.
Kānoa general manager of investment management Brent Chalmers confirmed that in November 2023, following Cyclone Gabrielle, Cherri Global was approved a loan of up to $5m, due to its recognition as a significant cherry producer and employer in the Hawke’s Bay region.
Chalmers said, however, that “while the loan was approved for $5m, it was only partially drawn down by Cherri Global, with a portion also unspent and returned”.
The funding came from the North Island Weather Events (NIWE) Primary Producer Finance Scheme, which was designed to help North Island land-based primary producers severely impacted by the weather events in early 2023, including the Auckland Anniversary Weekend floods and Cyclone Gabrielle.
Chalmers confirmed $1.35m is still owed to Crown Regional Holdings Limited (CRHL), the holding company for investments managed by Kānoa.
“CRHL will not know the final recovery amount until the liquidators’ process is complete.”
Regional Development Minister Shane Jones defended his regional growth programme in July after a long-delayed annual report showed more than half of the $257m loan book held by the Government entity formerly known as the Provincial Growth Fund was considered to be at risk of impairment or default.
Sprosen and White confirmed they are still unable to provide an estimated end date for the liquidation, and expect to issue a further report in six months unless the liquidation is completed beforehand.
Tom Raynel is a multimedia business journalist for the Herald, covering small business, retail and tourism.