Mainzeal head Richard Yan is challenging an $18 million New Zealand bankruptcy proceeding against him over the collapse of the business, saying this country's laws do not apply in China, where he now lives.

In the latest six-monthly update on Mainzeal, BDO liquidators outline how Yan is thumbing his nose at an attempt to recover money he has been found to owe in New Zealand.

"Mr Yan has applied to set aside the bankruptcy notice on the basis that the New Zealand High Court does not have jurisdiction over him because he now lives in China, has few remaining links to New Zealand and the Chinese courts will not recognise or enforce a New Zealand bankruptcy order," say liquidators Brian Mayo-Smith and Andrew Bethell.

Mainzel directors Yan, former Prime Minister Dame Jenny Shipley, Peter Gomm and Clive Tilby were collectively held liable for reckless trading and ordered to pay $36m, although they are appealing that decision.


Yan is liable for $18m alone and the others $6m each.

But the other three too are potentially saved from paying from their own pockets because the insurer will pay out, the latest report said.

"The insurers for Shipley, Tilby and Gomm have confirmed that $18m has been paid into a trust account to secure the liability of those directors under the judgment pending the outcome of the appeals process. The insurers also paid the costs award," the report said.

Mainzeal has 1400 claims totalling $158.3m received from creditors. Some creditors might get a partial payout.

"We expect that there will be some funds available for distribution to unsecured creditors," the report said.

The liquidators were appointed on February 28, 2013. Many different companies are involved in the action including Mainzeal Property and Construction, Mainzeal Group, Mainzeal Living and Mainzeal Ltd.

Read liquidator's report here: