Collapse hurts truck firms

Whangarei truck owner Dave Sills is owed more than $29,000 by Smith and Davies NZ. Photo / John Stone

The Companies Office will not investigate alleged irregularities in two logging companies that have gone bust owing $26 million unless an official complaint is made after both businesses are liquidated.

HarvestPro and Smith and Davies (NZ) - both 100 per cent owned subsidiaries of Kiwi Forestry International - owe a string of non-secured creditors $1.7 million, including $192,916 to seven Northland trucking firms. Three secured creditors are owed more than $24 million.

HarvestPro's sub-contractors in the Far North were forced to lay off about 100 forestry workers three weeks ago while all 120 staff of Smith and Davies (NZ) in Whangarei were terminated on March 16.

Whangarei truck owner Dave Sills is owed more than $29,000 by Smith and Davies, but will only receive $5862 if he agrees to the company's proposal to pay 20 cents in the dollar.

The collapse of the two companies led to questions over whether it had been trading while insolvent, but the Companies Office said it did not hold information on the financial position of the companies and was therefore unable to comment on their solvency or the directors' apparent efforts to restructure the companies' affairs.

"In the event that a liquidator is appointed to the companies, they will be required under section 258A of the Companies Act 1993 to report any suspected offending to the Registrar of Companies," the Companies Office said.

"The registrar will review allegations of offending and take action in a manner consistent with the Companies Office enforcement policy guidelines."

It said the board of directors of a company had all the powers necessary for managing, and for directing and supervising the management of the business and its affairs until the company was placed into liquidation, receivership or was subject to another insolvency procedure.

Since HarvestPro and Smith and Davies (NZ) were not in liquidation, receivership or other insolvency procedure, it appeared the directors were able to facilitate the sale of company assets.

"It should be noted, however, that the law imposes a duty on directors to consider the interests of creditors once a company becomes insolvent, and if a director continues to trade or authorises the disposition of assets to the detriment of creditors they may become personally liable for company losses," the Companies Office said.

Both companies owe secured creditors GE Finance, Mercedes Benz Financial and Itochu Corporation $24.9 million.

The former two have repossessed assets of HarvestPro New Zealand and Smith and Davies (NZ) and have yet to determine the recovered amount.

The directors of HarvestPro and Smith and Davies have proposed to pay non-secured creditors 20 cents for every one dollar of debt as a final settlement.