Collapsed Rotorua wood products firm Verda owes $8.9 million

PHOTO/FILE

The receivers for Rotorua-based Verda International, which was placed into liquidation in September, say the company has debts and liabilities of almost $9 million and assets of $6.5 million.

Kiwibank is the first ranked creditor and is owed $2.69 million plus accrued interest, according the receiver's report.

Employees are ranked as preferential creditors and are owed $94,000, consisting of accrued wages and holiday pay entitlements. Verda is understood to have employed from 20-to-25 staff.

A group of convertible note holders and shareholders is owed about $4.92 million, secured by way of a second-ranking General Security Agreement.

Verda International was an outdoor wood specialist formed after local and international shareholders came together in March 2014 and bought all of former company Verda New Zealand's assets, brands and intellectual property.

In addition, the investors took a 47 per cent stake in the company's Waitane Mill in Napier, which also went into liquidation in September.

When the new company was formed, chief executive Grant Butterworth said Verda had a unique position with a high performance, engineered range of products.

"Verda International Limited's strategic goal is to be one of the premium outdoor wood product brands in high value, global markets."

However, receiver James Greenway of BDO said, in his report, Verda had experienced increasing financial difficulties due to matters including the cost of manufacturing and insufficient profit margin.

"Despite restructuring attempts, trading losses continued to be incurred in the period prior to receivership," he said.

"Insufficient profit resulted in a financial deficit, which could not be funded by shareholders or other means. The company was unable to pay creditors as they fell due, resulting in ongoing supplies being interrupted."

As result, Kiwibank was requested by the directors to appoint receivers.

The receivers have determined that trading was not viable, and have undertaken an inventory, valuation and sales process for assets.

The report said the receivers had liaised with employees and other stakeholders, including unsecured trade creditors owed $860,000, and the Inland Revenue Department.

The IRD has issued a preferential claim for $49,000, primarily relating to GST and PAYE arrears. Due to the expected shortfall to secured creditors, there is unlikely to be any funds available for unsecured creditors.

Verda International receivership

-Preferential creditor claim balances are provisional, pending agreement between the receivers, employees and the IRD.