A Kāpiti Coast skin cancer clinic has gone into liquidation after the cost-of-living crisis dramatically reduced visits by patients who saw specialist care “as a nice to have, the kind of thing that you think you can put off”, a liquidator says.
But a larger factor was that owners Dr Roland Lotsu and his wife Audrey Lotsu bought a lifestyle block at the market peak, had to get bridging finance when their home didn’t sell, were in a difficult financial position and eventually called in a liquidator who presented a company balance sheet showing at least $732,000 is owed to creditors.
The couple asked Hamish Pryde of CS Insolvency to liquidate St Joseph Skin Cancer Clinic, which operated from 2 Presentation Way, Paraparaumu.
“The business, which operated as a specialised skin cancer clinic, had been experiencing a decline in turnover due to the cost-of-living crisis and people seeing specialist care for possible skin cancer as a nice to have, the kind of thing that you think you can put off,” Pryde wrote on his initial report.
A related company, Saxum Investments, owns the building from which the clinic operated and which was built four years ago.
“This company has not been able to keep up with the second-tier lending repayments. The secured party has demanded that they sell the property,” Pryde wrote.
“The building also has a couple of sub-tenants. They had tried to market the property with the sub-tenants, but the real estate agent had suggested that they get rid of the sub-tenants and market the property as vacant possession. So they have terminated the sub-tenants, who shall be out of the building by the end of November. There has been increased interest in the property because of the vacant possession option.”
The primary reason for the liquidation was the Lotsus’ decision to buy a lifestyle block with bridging finance from a second-tier lender. There was a big drop in property prices, which the couple tried to ride out, Pryde wrote.
However, the debt servicing was a “massive burden” that was funded with drawings from the business, resulting in significant overdrawn current accounts.
Inland Revenue is owed an estimated $282,000 and employees a further $20,000. They appear as creditors of a schedule in the first report. The clinic received $92,000 during the Covid-19 pandemic to keep five people employed.
Preferential creditors are owed $297,000 and unsecured creditors $453,000.
In 2019, the Herald reported how the clinic was being built behind the Z petrol station and was spearheaded by Dr Lotsu.
Advanced clinical technologies and equipment were to be offered by the skin cancer-accredited doctor, working in Paraparaumu since emigrating with his family from the United Kingdom in 2010.
The clinic’s assets are listed as having a book value of $657,000 but might be realised for far less although the true value of most of them is listed as unknown. Those include a bank account with just $833, furniture and fittings, vehicles and office equipment.
A loan to the couple’s related business, Saxum Investment, appears in the accounts as $101,000 and shareholder advances have been made to the clinic of $324,000.
The estimated statement of affairs is based on the clinic’s Xero accounting records as at November 27, so wasn’t written by the liquidator.
Several disputed accounts have already been identified, Pryde wrote.
Inland Revenue, Ace Office Products, the Archdiocese of Wellington, Beach FM, BOC, Eftpos NZ, MediaWorks Radio, NZ Refrigeration Services, Healthlink Group, Coastal Lawns and Garden Care, Heartland, Medtech, MS Security and others appear on the schedule of known creditors.
The liquidator estimates it will take up to six months to deal with all the matters. He will produce another report next year.
Anne Gibson has been the Herald’s property editor for 23 years, has won many awards, written books and covered property extensively here and overseas.