Tamarind Taranaki was placed in liquidation at a watershed meeting with creditors this morning.
The company, which operates the Tui oil fields ran into debts when a drilling campaign in September went over budget and was unsuccessful.
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Malaysian-owned Tamarind Taranaki reportedly has debts of around $350 million, including a US$100 million claim from the New Zealand Government for the decommissioning costs of closing and cleaning up the fields.
Tamarind's parent company had given the Crown a guarantee to cover the decommissioning costs, but officials had warned that liquidation could meant the cost fell on taxpayers.
According to a briefing from the Ministry of Business, Innovation and Employment, Tui had generated $529m in royalties since 2008. Under the terms of the permit, the Crown was to effectively pay 42 per cent of the cost of decommissioning in the form of tax and royalty rebates.
Creditors were attending a watershed meeting in New Plymouth on Thursday morning.
Shortly before the watershed meeting, PwC was appointed receiver of Tamarind.
The company was then placed in liquidation, with Borrelli Walsh, which had been acting as administrators.
Malcolm Hollis, a partner at PwC, said the company was appointed at the request of Tamarind's lender, Hong Kong-based OCP Asia. As receivers PwC's role was to manage the business and its assets, primarily for the benefit of the lender.
"We will work fairly closely with the former administrators, now liquidators, to see what processes they have put in place and what plans they put in place and essentially look to see whether they're appropriate, review those, and then make some decisions as to how we deal with the business and its assets going forward," Hollis said.
PwC had already met with the liquidators and was due to meet with former management and directors of Tamarind Taranaki.
Although he had not had time to assess the company's position it was clear that its creditor levels were in the hundreds of millions while "the asset level, at this stage, is nowhere near that".
Creditors would almost inevitably face a loss on the amount they were owed.
"I think that's fairly certain," Hollis said.
"There is an opportunity for a longer-term restructure but whether it's this company or another company that might take these assets over at a later stage, we won't know that until next year," Hollis said.
"My focus is really ensuring over the next few weeks that things are all under control. We'll all get back in January and focus on the slightly bigger picture."
Jason Kardachi of liquidators Borrelli Walsh has not responded to a request for comment beyond saying a statement would be issued "later today".
A spokesman for the Ministry of Business, Innovation and Employment confirmed officials from the ministry attended the meeting and voted in support of placing the company into liquidation.
"At this stage it is premature to assess the Crown's liability for the costs associated with decommissioning and plugging and abandonment of the Tui field," the spokesman said.
"The Crown will continue to investigate its options in respect of the parent company guarantee."