The director has cited the residential market’s downturn for the fall. Photo / MKiMAGES
The director has cited the residential market’s downturn for the fall. Photo / MKiMAGES
A house-building business with properties at Hobsonville Point and the Waikato failed with liabilities of $8.9 million, six months after it was incorporated.
Insolvency practitioners are now in charge of the business. The director has cited the residential market’s downturn for the fall.
An initial liquidator’s report on FCG Lakesidefrom Leon Bowker and Luke Norman of KPMG cited the subdued housing market, rising costs, cash flow and funding challenges.
The company was previously called FCG Karaka and described itself as a house-building and construction business which worked in the Auckland and Waikato regions.
Its properties at Hobsonville Point in Auckland are on Bristol Freighter Rd and Waterlily St.
Its Te Kauwhata properties are on Panewaka St and Bittern Rd.
The company was incorporated on March 21, its sole director being Hudson Dahlberg of Papakura.
KPMG was initially the administrator and said the company was one of a group of construction and property development companies which had aimed to deliver house and land and construction-only projects.
Those are Orpheus Investments, Finesse Holdings, Finesse Residential, Finesse Construction, and Tomunga Properties, all in administration and receivership.
Initial reports on those five other businesses are yet to be lodged with the Companies Office.
FCG Lakeside owned real estate but its assets were heavily mortgaged and it couldn’t survive in this market.
“The company is a property asset holding company. It currently owns eight properties with a combined estimated value of over $7m excluding GST,” KPMG said.
Mortgages are held by NZFA Capital and Pinnacle Property Funding.
Four of the properties are complete and four are nearly complete, KPMG noted.
“Subsequent to our appointment, one of the properties was sold,” the KPMG accountants said.
The director states that the company’s business and that of related entities which are also subject to an insolvency process, failed as a result of a subdued housing market, rising costs and cash flow and funding challenges.
The director explored options for equity funding as an alternative to debt funding, to sustain the company’s cash flow.
However, given the current property market conditions, equity funding was difficult to obtain.
Collectively, these challenges have led to the company’s inability to secure the necessary cash flow. Ultimately this led to the decision to initiate an insolvency process, KPMG said.
35 Bristol Freighter Rd, Hobsonville Point, estimated to be worth $1.1m to $1.2m.
Data on one of the eight properties, 35 Bristol Freighter Rd at Hobsonville, said it was built this year with four bedrooms, two bathrooms and one parking space and is estimated to be valued in the range of $1.1m to $1.2m.
KPMG will now go about realising all assets and attempting to repay its debts.
Assets were listed at $1.4m in the form of receivables due from entities related to the company in liquidation.
But total liabilities were put at $8.9m and included $6m owed to secured creditors who are the two finance businesses but a further $2.8m owed to unsecured creditors who include Auckland Council and Inland Revenue.
KPMG listed loans of$4.5m from NZFA and $1.5m from Pinnacle Property, secured by way of mortgages over land. Creditors voted for liquidation at a meeting.
The accountants will issue another report in six month’s time, updating on what they have done since being appointed.
The Herald yesterday reported the number of insolvencies in the second quarter of 2024 was the highest in eight years.
Between April and June there were 700 insolvencies reported, up 23% from the first quarter of the year and 36% higher than the same period a year ago, according to the latest BWA Insolvency Quarterly Market Report.
There were 635 liquidations in the second quarter of the year, up from 472 in the same period last year.
Anne Gibson has been the Herald’s property editor for 24 years, written books and covered property extensively here and overseas.
