Creditor claims swell $10.5m in construction business collapse

A new report is out on the ex-Hawkins business.

The financial position of several businesses associated with what had been New Zealand's second-largest construction company has worsened by $10.5 million, according to a new report.

Andrew Grenfell of McGrathNicol in Auckland is the receiver of Orange H, previously called Hawkins Group before it was sold to Downer EDI in 2017.

In his latest report, Grenfell explains that a $10.5m bond from H Construction Schools 2 PPP has been called up in full, increasing the amount owed to McConnell Limited to $26m.

H Construction Schools is in liquidation and is part of the corporate structure connected to those businesses which have failed.

The performance or construction bond is understood to have been called on by a member of a private-public partnership specially formed for school construction.

"The bond was cash-backed by McConnell Ltd with a guarantee from Orange H Group," Grenfell's report said.

"As a result, the amount outstanding to McConnell Ltd has increased during the period to $26m," the report said.

How much unsecured creditors will get from the many ex-Hawkins businesses is unclear.

"At this stage, it is uncertain what funds will be available for unsecured creditors," the new report said.

Secured lenders to the 13 businesses under the Orange H umbrella are owed $174.5m, the new six-monthly receivership report said.

In early 2017, ASX-listed engineering consultancy Downer EDI bought Hawkins' construction, infrastructure and project management businesses from the McConnell family for A$55.4m (around $59.9m at that time).

The receiver explained the background to the business collapse and a chart showed the corporate structure.

In March 2017, the group sold its business and assets to Hawkins 2017 Ltd and Downer New Zealand, both subsidiaries of Downer EDI, the report said.

The sale included employment contracts, the Hawkins brand and name, plant and equipment and selected construction contracts.

Construction projects not included in the sale remained with the various companies for completion. The majority of the retained projects had reached practical completion and were in their defects liability period, the report said.

"During the latest six-monthly period the receivers have collected a number of payment claims and retentions on projects. They continue to work with principals to seek recovery of amounts due on the retained projects.

"In some cases, this may require legal actions against principals," the receivership report said.

Grenfell said today: "The bond was called up by the owner of the PPP that developed the schools. It increases the liabilities of Orange H. However, we note that the schools subject to the bond are completed and the bond was called to cover any potential future defects, given the insolvency of the contractor. Negotiations are currently in the process to determine a value to cover any potential future defects that may arise. Once agreed, the balance of the bond will be returned."

Thirteen ex-Hawkins companies are in receivership and liquidation: Orange H Group, H Construction Group, Orange H Management, H Plant, Orange H Construction, H Construction South Island, H Construction North Island, H Construction North Island Group, H Construction N.I, H Construction Hobsonville, H Infrastructure Holdings, H Infrastructure (NZ) and HUC.