Uncertain future for Arrow International creditors: first liquidator's report

Arrow International was a national builder. Photo/Paul Taylor

Whether creditors of national construction business Arrow International will get any money is unknown, according to the first liquidator's report just released.

Andrew Bethell of BDO Auckland has issued a statement of financial affairs for the business, the ultimate holding company of the Arrow group of companies.

That showed $42.4m as the estimated book value of Arrow International's assets available for secured and preferential creditors.

But how much of that can be realised is uncertain because $26m of it is investments in subsidiaries and a further $15.7m is related party debts.

Bethell also listed as "unknown" the funds available for unsecured creditors, although he noted the book value of funds was $40.2m.

Arrow's work includes Queenstown's new iFLY flight simulator, a $28m 18-level apartment project on Auckland's Airedale St and a $40m 21-level apartment block on Beach Rd, Parnell.

It was a national builder and one of this country's larger ones with a spread of works on retail, commercial, government, tourism, education, retirement sports and recreation and residential projects.

The company has about 450 staff, annual revenues of more than $350m and was founded by Ron Anderson and Bob Foster in Dunedin in 1984.

On February 28, Arrow was placed in voluntary administration after a contractual dispute left it with insufficient cash flow to meet operating costs.

On June 6, a watershed meeting of creditors was held and that resolved to put the business into liquidation. Bethell and fellow BDO staffers Andrew McKay and Colin Gower, were appointed as liquidators, the latest report said.

Arrow was working on about 20 projects around New Zealand when it failed.

Bethell's latest report said: "The company had guaranteed construction performance bond facilities of Arrow International as well as Arrow NZ's performance under particularly individual construction and services contracts.

"With Arrow NZ being placed into administration, the directors determined that Arrow Group needed to be placed into administration as a protective measure against calls under these guarantees and to allow an orderly realisation of its assets," Bethell wrote.

Arrow International's registered offices were at 1 Broadway in Newmarket and its shareholders and directors were Ronald Douglas Anderson and Robert Athol Foster, Bethell noted.

A list out with the latest report says creditors are ANZ, Auckland Concrete, Budget Rent A Car, Citylink, CoreLogic, Creating Communities, Custom Fleet, DLA Piper NZ, Ernst & Young, Ezypay, employees Fiona Foster, Mark Taylor, Matthew Currie and Shane Albrecht, Fitzroy Engineering Group, Inland Revenue, Pivotel NZ, Vero/AAI Bonds and Vodafone NZ.

Arrow was understood to have been on the losing end of a $4.2 million dispute with subcontractor March Construction, a Christchurch-based company now owned by France-based Vinci Construction.

"This is not the outcome we wanted or expected, but in light of a recent adjudicator's decision, we had no choice but to take this course of action," Arrow's board said in a statement issued earlier this year.

"We have managed the tough trading conditions which have stressed the entire sector, but this unexpected result has affected solvency to the point that we could not sustain trading as we have been."

Arrow followed other firms into financial difficulty including Hawkins subsidiary Orange H and receiverships at construction companies Ebert's and Accent.