By Philip Chandler of Mountain Scene
A Queenstown resident whose former development company is in hock to creditors for $1 million is selling luxury apartments through a new company.
Lachlan Francis' company was to build a 16-unit apartment complex, Freshwater, on the corner of Hallenstein and York streets.
His company, CSF Trustees Ltd, was placed in liquidation on May 4 last year at the request of an out-of-pocket contractor, Amalgamated Builders Ltd.
Liquidators say the company owes 16 unsecured creditors $1,021,474.94.
Seventeen days later, Francis formed a new company, The Mont Blanc Ltd, which in January this year applied for consent for a similar-looking 23-unit complex on the same site.
Six apartments have already sold off the plans for about $2 million or above, Invest Queenstown agent Simon Green says.
When he was contacted by Mountain Scene yesterday, Francis said he needs to seek advice, and will look to comment next week.
One of the creditors, Queenstown Earthworks Ltd owner Craig Harper, says he's owed about $50,000, including about $30,000 he shelled out for his own subcontractors.
"We bent over backwards to help [Francis]," he says.
"It's absolute bulls***."
He suggests Francis hold a creditors' meeting and say, "look, when we've finished this [project], we'll pay the people who've done the work that's already in there".
Creditor: 'Not holding my breath'
Local Just Dig It Ltd owner John Walsh, owed about $2000 for installing a service connection, says "I'm concerned that he can do that, just like that, without paying his bills from the last [project]."
Local Aurum Survey Consultants Ltd director Bruce McLeod, whose company's not owed a lot, says Francis recently popped into his office.
"He sort of indicated we might get some of our money yet, but I'm not going to hold my breath on it."
He, too, thinks it would be good if Francis could pay CSF Trustees creditors from the proceeds of his new company's complex.
Bruce Middleton, director of Amalgamated Builders, which is thought to be the biggest unsecured creditor by far, didn't want to comment.
According to the first liquidators' report, works ceased on Freshwater in late 2018 due to a dispute between CSF Trustees and the "head contractor", believed to be Amalgamated, "arising from the building contract budget".
"In 2019, the company sought to engage a new contractor … however the previous contractor issued a statutory demand in respect of unpaid payment claims.
"The company was then put into liquidation on 4 May, 2020, by an order of the High Court in Whangarei."
Shortly before then, CSF Trustees had sold the site to a Wellington company which was the first mortgagee, thereby satisfying its debt.
The liquidator, PKF Corporate Recovery & Insolvency, says in its second report it's investigating this sale "and other related matters with a view to determining whether there may be an avenue for recovery for the company's creditors".
"This involves a review of [Francis'] conduct to determine whether he may be held liable for breaches of any duty under the [Companies] Act."
Meantime, the remaining 17 apartments in The Mont Blanc — ranging from two to four bedrooms — are selling from $1,099,000 plus GST to $2,399,000 plus GST.