Bella Vista Homes allegedly made a series of transactions of "a significant value" to other companies and entities connected to former director Danny Cancian in the four months before it went into liquidation.
The liquidation of Bella Vista Homes left behind 30 unfinished houses, and millions of dollars in outstanding debts to creditors.
Last Friday, 21 Bella Vista Homes at The Lakes were evacuated by the Tauranga City Council to avoid immediate danger after a geotechnical report found an unretained slope on the development site was at risk of failing.
Rhys Cain, a Christchurch-based insolvency practitioner with Ernst & Young, said it was highly likely they would be contacting the entities in question to seek the recovery of the transactions made to them by Bella Vista Homes.
"We're doing an analysis of those."
When questioned by the Bay of Plenty Times Weekend this week, Cancian said there was no physical money transferred or paid out – "it was all just paper transactions".
He said money that was owed to him by Bella Vista Homes was simply paid instead to companies that he was connected to or owned to keep them afloat.
Cain, who took over liquidation proceedings in January, said the liquidators had written to Cancian advising him of what the financial records of the company showed his current account position to be.
"And that shows that he (Cancian) owes a significant sum of money to Bella Vista Homes," he claimed.
He would not disclose how much that was.
"We've written to him saying company records show you owe 'x' number of dollars, please pay it back or if you think that's wrong, tell us why."
Cain said the liquidators have still got to look at all of the transactions between the different entities.
"We need to establish to our satisfaction whether there were offsets done or whether money actually changed hands," he said.
"At the moment, we've just got a summary of the accounting system that shows this is how much that company was owed on this date and this is how much it was owed on the date of liquidation and there's a significant movement in that."
Cain said they needed to break that down and see what specific transactions were actually made.
He said that the different companies and entities involved either had Cancian as a shareholder, a director, or as a director who had resigned.
"For the purposes of these transactions, they're still classified as a related entity."
He also said the evacuation of the 21 Bella Vista houses last Friday had nothing to do with the liquidators and was an issue for the homeowners.
The first liquidator's report in early December found Bella Vista Homes went into liquidation leaving behind 30 unfinished houses and owing at least $4.35m to 95 creditors.
Cain said the $4.35m figure given by the former liquidators was based on the balance sheet at the date of appointment.
To date, the liquidators have received total claims of $3.7m, he said.
Some creditors are in other parts of the country.
The next liquidator's report is due in May.
Cancian said some of his other companies owed Bella Vista money so that got traded off with money that Bella Vista owed him.
"I set up other companies so they could work for Bella Vista so I could control the process of what happened on the jobs rather than outside contractors."
He said he wanted to cover the debt for the other companies "just to clear all those companies up so they can survive".
Cancian said the paper transactions were all done by his accountants at Matley.
Principal and owner of Matley chartered accountants David Waine confirmed this and said what they did was standard accounting practice but there are different rules for liquidations.
"We offset amounts owed to and from companies to form a net position. Doing so meant that associated companies to Danny benefited over other creditors.
"The liquidator is looking at which transactions need to be reversed to get a clearer picture of what is owed by Danny's other companies."
Professor Jilnaught Wong, from the University of Auckland's Department of Accounting and Finance, said intercompany transactions were not uncommon.
"However, when these transactions occur before a receivership or liquidation and they are transactions with a related party such as a director of the company or with companies which the director owns, then a question arises if the director has been given preferential treatment ahead of unsecured creditors," he said.
"That preferential treatment is a matter of company law, and a lawyer is better placed to advise the exact priorities."
Meanwhile, the owner of a Tauranga-based company that is owed "many tens of thousands" of dollars by Bella Vista Homes said it had been a "really tough time and a pretty traumatic experience" for his business.
The man, who did not want to be named, said his company worked with Bella Vista Homes for an extended period of time and worked really hard to make sure they gave them a good service, good products at a good price, and always ensured their clients were well looked after.
And then it all changed very quickly and unexpectedly, he said.
"All of a sudden they stopped paying their bills and then they stopped answering their calls.
"We got pretty deeply concerned and started chasing them pretty hard and then before you know it, there are a lot of rumours coming out in the market about what's going on and it's just a bloody, completely gutting experience – that this could happen so quickly during a boom time."
The owner claimed his company had a whole lot of personal guarantees in place from the directors of Bella Vista Homes.
"But in spite of having all that, it feels very unlikely that we are going to get any money.
"I would expect it will be a total loss."
That was devastating, he said.
When the Bay of Plenty Times Weekend informed the owner about the transactions that were allegedly made by Bella Vista in the months before liquidation, he said: "That's extremely frustrating and surprising to hear that and I would hope that the liquidators and the lawyers involved in the process, and the process itself, is robust enough to ensure that that can't happen."