Liquidation looms for Escalator Advertising

Escalator Advertising is likely to go into liquidation today, with creditors owed nearly $5 million.

The company is already in voluntary administration and receivership.

Escalator Advertising, which used to have its shares traded on the Unlisted exchange, has patents registered in 50 countries for its business idea: converting escalator steps to enable them to display advertising.

It went into voluntary administration last month, after Unlisted suspended its shares because the company had not paid its listing fees to the exchange.

In March, Escalator sold its key assets to escalator company Kone Corporation for €750,000.

Administrators John Cregten and Andrew McKay of Corporate Finance say a deed of company arrangement is not being proposed and they recommend the company be placed in liquidation.

“The director’s statement indicates that Ed Harman and companies associated with him, financed the business primarily on his own from 2005 to 2007.

“It became apparent early in 2008 that his appetite, and probably his capacity, to continue funding the business had declined significantly.

“With the absence of support from Ed Harman, all of the activities of the business over the past 12 months have been geared towards the sale of the key assets of the business,” they say in a report.

Mr Harman resigned from the Escalator board in February after being declared bankrupt.

His companies attracted investment from some of country’s most successful business people, including Allan Hubbard, but the Harman empire collapsed last year. The outstanding debt has been estimated as high as $30 million.

The Escalator Advertising administrators have also flagged a £1.24 million secured debt being claimed by Terry Viccars, James Grigg and Graham Smith.

Mr Grigg is a former director of Escalator.

The administrators say the debt owed to these men was not registered on the Personal Properties Security Register and a liquidator would need to obtain a legal opinion on the validity of the claim.

“One of the first duties of the liquidator will be to determine the validity of the general security agreement,” they say.

A creditors meeting is being held at the Auckland offices of Chapman Tripp this morning, at which the attendees will decide whether to put the company into liquidation.