The Holiday Inn has 280 units, most of which were sold
to individual investors. Photo / Supplied
The company behind Wellington's $100 million Holiday Inn has collapsed, leaving construction firm Fletcher Building $900,000 out of pocket.
Investors in the hotel are also owed significant amounts in rent payments, their lawyer says.
Melview Featherston St, owned by property developer Nigel McKenna's Melview Holdings, was placed in liquidation by
Fletcher on November 24. The company has also now been put in receivership by Structured Finance.
Liquidator Kerryn Downey of McGrath Nicol said there was a dispute between Fletcher Building and Melview Featherston St over the $1.7 million final bill for construction of the hotel. It was agreed Melview would pay in instalments, with Fletcher having the right to put the company into liquidation if payments were missed.
"McKenna has made some payments under that settlement agreement but then has defaulted on others," Downey said. Fletcher was still owed $900,000 and was the company's major creditor. The liquidators were working with receiver PFK Corporate Recovery to recover funds.
At this stage it appeared the company's only assets were $130,000 of mortgages and 16 unsold units in the hotel.
The Holiday Inn has 280 units, most of which were sold to individual investors. It is managed by Galway Tourism Investment Group, which operates out of Melview Developments' Auckland offices and is chaired by Nigel McKenna.
Wellington lawyer Roger Chapman is advising investors and said Galway had not paid rent to at least one group of them for some time.
"At the moment as I understand it the investors aren't getting anything at all."
Downey said he also understood there were significant rates arrears owed to Wellington City Council.
Director of hotels for Galway, Paul Evans, said that net rent payments for the current month went out to investors yesterday.
Investors were still owed money because initial promises of guaranteed rentals had not been met yet. He put the hotel's woes down to the global financial crisis.
In June, the Herald reported that the Holiday Inn had abandoned guaranteed rental payments to investors, paying them only what was generated by occupancy of the hotel's rooms.
Two of McKenna's companies developing the $1 billion Kawarau Falls project in Queenstown were placed in receivership in May by BOS International (Australia), owed $117 million.
