Creditors give Akita more time

By ANNE GIBSON

Creditors of embattled builder Akita Construction, which owes nearly $6 million, voted unanimously yesterday to support it.

Insolvency specialist Jeff Meltzer said after a meeting in Auckland of Akita's 199 creditors that a proposed scheme of arrangement was ditched at the last minute because the builder's problems had escalated. But creditors had agreed to give it even more time.

Akita, which owes creditors $2.3 million but has total debts of almost $6 million, is a victim of the rotting homes crisis. Developers are withholding money because they fear problems on residential jobs that Akita has worked on in Auckland.

Akita arranged a scheme to extend payments to April next year, paying the $2.3 million in stages.

But Meltzer said Akita's financial situation had just worsened because of disputes over nearly $1 million of work it had completed on Dannemora Gardens, a Howick retirement village it was building for Vision Senior Living.

That dispute was going to arbitration, so Akita had abandoned the site, Meltzer said.

Vision Senior Living director Peter Bourke said Akita owed it $500,000, while Vision was withholding only $360,000 from Akita.

"We don't feel responsible for Akita's problems and have made a counter-claim against them. They abandoned the site and we terminated their contract on October 3."

Bourke said Vision had made all but one payment certified by quantity surveyors Rider Hunt.

Akita has built 14 units and the common area of the $40 million village, which will have 200 units when it is finished.

Meltzer said adding nearly an extra $1 million to Akita's debts meant the first arrangement was unworkable. A new deal had to be proposed, which could see creditors waiting longer for their money.

A creditors committee had been formed and a new scheme of arrangement would be formulated. Creditors would vote on it early next month.

In the meantime, creditors are proposing that money earned by a new company, Akita Group, on existing contracts is paid into a trust account run by Meltzer's firm, Meltzer Mason Heath.

Meltzer said many of the subcontractors at the meeting agreed they had to be more united in the way they sent messages to developers from whom they did not want to withhold money to cover the possibility of leaky buildings.


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Further reading
Feature: Leaky buildings

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