The High Court at Auckland has ordered the winding up of the beleaguered Pacificare Trust which is mired in debt and controversy.
Last week it was reported that the trust's contract to cater for 200 mental health clients, mostly of Pacific origins, had been transferred to the mainstream Challenge Trustin Botany.
The switch brought allegations of racism.
Around 100 staff who worked for Pacificare Resthome and Hospital in Mangere said they had not been paid.
Justice Ailsa Duffy said Pacificare was "plainly insolvent" and had to be wound up under the Companies Act.
The judge said Pacificare's trustees had applied for the appointment of a liquidator order under the Charitable Trusts Act.
However, two "substantial" creditors, Culverden Group and NZ Guardian Trust Co, had initially opposed the move. They said the trust could not establish it was insolvent.
The judge said since the hearing last June, there had been several developments. The IRD had served the trust with a statutory demand for unpaid GST and employer deductions of more than $605,000 on January 27. Pacificare said it could not pay.
Justice Duffy said Pacificare had lost its contract with the Counties Manukau District Health Board on January 31. Then on February 3, Guardian Trust called in the receivers.
The judge said Guardian Trust had now withdrawn its opposition to Pacificare being wound up. Culverden had not responded to the new material.
However, the judge said: "Whatever the position at the time of the hearing, Pacificare is now plainly insolvent."
