Fava collapse costs creditors $10m

By BOB DEY

Failed property developer Philip Fava's records for his main company, Churchill Group Holdings, show creditors will lose $10.4 million from the group's collapse.

Fava's own interests are set to collect the bulk of the $2 million recovered from a trust advance and would share the $2 million recovery from one asset with the ANZ Bank and the company which built his Whangaparaoa shopping centre and a vacant standalone building, Mainzeal.

A statement of affairs supplied to Churchill's liquidators at Jeff Meltzer & Associates shows the bank and builder are owed $2.3 million and $3.3 million respectively, while two Fava companies have $5.5 million of secured debt.

The shortfall in payment to them means $6.6 million would be classified as unsecured, but $2.5 million owed on a debenture to one of the Fava companies would rank ahead.

So any extra return would go to that debenture-holding company, owned by Fava and another of his trusts, before his banker and builder get a look-in.

Fava bought the Whangaparaoa shopping centre in 1993, sold some of the land, redeveloped the bulk of the centre and added the standalone building, and brought in London and Canada-based partners two years ago.

Their company, Aral Property Holdings, owned through Bermuda, bought its first 50 per cent of the centre, now named Pacific Plaza, for $14.8 million and took control of the whole centre this month as Fava exited with his remaining $2.7 million of equity.

Aral has brought in CB Richard Ellis' asset services director, Nick Wareham, to manage the centre.

Not surprisingly the bank - as mortgagee in possession of both the stand-alone building and Fava's Parnell home - is taking its time working through the sale of both assets.

Fava also bought the hotel next to Pacific Plaza a year ago for $1.65 million, financed by Elders, with plans to extend the centre, building 2500 sq m of bulk retail, 2350 sq m of speciality shops, a 600 sq m medical centre, parking for 294 cars and a multi-level tower on the 900 sq m site.

The financier this week launched a mortgagee tender for the hotel, closing with Michael Williams of Colliers Jardine on December 13.

Fava's statement to the liquidators on Churchill's collapse says the company had a memorandum of understanding for the completed development but this could not be converted into an unconditional sale agreement, so development finance could not be obtained and his company owning that site, Matam, could not repay its $700,000 advance from Churchill.

He also cited bad luck with the standalone building, saying the prospective tenant defaulted after construction began.