by ANNE GIBSON
The head of collapsed building company Goodall ABL says an Auckland developer is partly to blame for his company's fall, but he also blames a domino effect and cash flow problems.
John Greenwood says that if Melview Development's Nigel McKenna had paid the bills for construction of The Quays in the Viaduct Harbour and 84 apartments in a 14-level tower in Scotia Place, his firm would not have gone into voluntary liquidation.
Greenwood claims McKenna held back $400,000 on The Quays and $750,000 on Scotia Place, which crippled Goodall ABL.
"If McKenna had paid, we would not be in this position," Greenwood said.
But McKenna strongly disagrees, saying only $300,000 was held back on The Quays and that was for work which was not done: "That would have been paid if the project had been completed," McKenna said, adding that he has had to employ other contractors to finish the apartments and it will cost him more than $300,000.
As for the Scotia Place apartments, McKenna agrees he withheld $750,000 but said this was not a retention but a progress payment in the process of being made when Goodall ABL went under. "I was ready, willing and able to pay it, but they were not willing or able to pay their subcontractors."
This $750,000 progress payment, McKenna said, was to be made at the end of February, "But Goodall ABL are required on a monthly basis to certify to the bank that they have paid their subcontractors and they would not do that in February."
The firm went under last month with estimated debts of $20.7 million, although the final tally is expected to be higher.
As a result, McKenna is negotiating with the liquidator, Rod Pardington of Deloitte Touche Tohmatsu. "I am going to pay that to the liquidator, but when that happens is between myself and the liquidator."
McKenna said it is "unfair and incorrect to ascribe blame for the company's collapse" to any project. "Certainly any suggestion that it was the fault of an individual outside of Goodall or any of their development company clients is not sustainable," he said in a recent letter to the Herald.
Greenwood was general manager of Goodall ABL and was a director. He had 10 per cent of Goodall ABL, while Amalgamated Builders Ltd, controlled by Graeme Hill, owned the remaining 90 per cent. Asked what went wrong, Greenwood responded: "It was simply a cash flow issue with the company."
At the time problems arose, Goodall ABL had two large jobs completed and on course. These were the Memphis Apartments in the Symonds St/New North Rd area, and Railway Campus, Covington Corporation's project to turn the old Auckland railway station into student apartments.
Not only had Goodall ABL successfully completed these two large projects, but it had significant new work in hand.
"The new work was worth over $40 million, but it just wasn't coming on stream quickly enough to get the cash flow to basically meet the creditor payments."
However, there was a snag with some other completed work. Retentions - money held back by the developer - were large. The retentions amounted to about $1.5 million in total, Greenwood said.
This included about $400,000 which Nigel McKenna of Melview Develop-
ments owed Goodall ABL on The Quays apartments in the Viaduct Basin, according to Greenwood.
"We had been depending on Nigel McKenna to honour agreements he made."
Greenwood concedes that it might not sound like a lot of money - "only $400,000 ... of the $11 million construction contract" - but on top of this, he said, was the $750,000 McKenna owed for the Scotia Place apartments.
Not only were these retentions significant, he said, but Goodall ABL was just starting on one of its most ambitious and expensive projects: the apartment block known as Shed 24 at the end of Princes Wharf for David Henderson's Kitchener Group.
The need to have the retentions paid and get money in to start the Princes Wharf apartments put a double squeeze on Goodall ABL: "That [the retentions] was money owed to us by the developer and basically we needed the cash flow to tide us through for two months until the cash flow began on Princes Wharf. When you start a job, it costs a lot of money before your cash flow becomes positive."
Another issue compounded the existing problems.
Payments which would have been made to Goodall ABL in normal circumstances were being deferred because of the company's financial instability.
"So all of a sudden, the $3 million worth of debtors went up to $9.1 million. The liquidator's job is to get as much of the $6.1 million back."
As if this wasn't enough, disputes on contract variations were added to the mix.
A further $2 million of losses - which takes total losses up to around $12.3 million - was from disputes over contract variations on work already completed.
With the amount of work Goodall ABL had on - around $60 million worth - Greenwood said the variations were significant.
"The other $2 million occurs because with $60 million worth of contract work, the variations can be considerable.When a company gets shaky, everyone whams in as many variations as they can into the argument."
Greenwood described the situation as a "total domino effect. It was so quick, and our position was that we could have continued trading but all that would do is replace one creditor with another."
Despite this, Greenwood does not agree with the "how it went down, how it finished, let's call it the handling in the last week by everyone concerned. I don't think it should have gone into voluntary liquidation."
Asked why he didn't attend the creditors' meeting at Alexandra Park in March, Greenwood said it was important that one spokesman deal with matters. That was Graeme Hill.
"I'm better to look like the bad guy. Someone's head needs to be on the block, so I put mine up."
Asked what he was doing now, Greenwood said he was having "a well-earned two weeks off" and spending time with his family.
Greenwood has spent all his life working in the property sector in Auckland. Married, with five children, including a 6-week-old baby, the Milford resident is now faced with selling his house as a result of the collapse of Goodall ABL.
Greenwood worked with Mace Developments. He formed his own retail and property management consultancy, Centre Corporation, which he sold to Colliers Jardine. He was a Colliers director until 1996, according to Colliers' managing director, Mark Synnott.
He left to go to design-build specialists Jonmer Projects Ltd, then joined Goodall ABL.
Goodall ABL - what went wrong?
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