Liquidator sheets home $19m in liabilities to Mainzeal offshoot

A building facade supplier linked to the collapsed construction company Mainzeal Property and Construction had racked up total liabilities of $18.9 million, according to the first liquidators' report.

King Facade, a company with links to a joint venture between elements of the Richina group of companies, which owns Mainzeal, was apparently being funded by Mainzeal and "had recorded substantial losses".

Supply chain issues with a Chinese manufacturer, understood to be the Shenzhen, China, based King Facade Decoration Engineering Company, were cited in early statements regarding to the Mainzeal receivership.

The preliminary report lists a total of 104 identified creditors for King Facade, and provides a basic account of its financial position showing total liabilities of $18.98 million, offset by total assets of $4.465 million.

The majority of this is $5.79 million of value ascribed to Richina Global Real Estate, King Facade's 100 percent shareholder, and one of a web of companies controlled by Auckland businessman Richard Yan.

Work in progress is noted as a negative asset valued at $2.68 million. The report says King Façade was involved in three significant Auckland property developments when it was placed in liquidation on February 13.

One was for Manukau Institute of Technology and two were remedial works on residential apartments in Auckland – Hobson Gardens and Argent Hall. The cost of fixing so-called "leaky buildings" was also cited as a key reason for Mainzeal's collapse into receivership early this month.

The liquidators say they are still trying to work out the relationship between another similarly named company, King Facade NZ, and the company now in liquidation. King Facade NZ appeared to be a joint venture between Richina Global Real Estate (50 percent), Shenzhen King Facade (30 percent) and Pacificflag (20 percent).

However, Mainzeal Property and Construction appeared to have funded King Facade's losses, say liquidators Brian Mayo-Smith, Andrew Bethell and Stephen Tubbs, of accounting firm BDO.

Meanwhile, the Registrar of Companies is making inquiries into why Mainzeal and Richina group companies, which have significant foreign ownership, have not filed accounts with the Companies Office since 2007-08, when Richina delisted from the NZX.

"Recent company amalgamations and restructures (resulting at times in a change of ownership) add some complexity and it is premature to advise the Registrar's final view at this time," a spokesman for the company says.

(BusinessDesk)

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About time everything's starting to unravel. King Facade was a constant failure propped up by Mainzeal. Time to start looking into Yan's winery, which was no doubt also funded from Mainzeal's (subcontractors) cashflow.

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King Facade ?? How apt..

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It's high time we got rid of retentions. If a subbie has warranties in their contract why screw around with retentions? With margins so tight, taking the 10% is often all the profit. If you do a job early on you have to wait until the project is finished (in our case 18 months) before you even get a sniff of getting the balance. Enough!

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How much did Richard Yan paid himself while managing Mainzeal into receivership, owing millions?

If he paid himself heaps a year while Mainzeal was under cashflow pressures, the SFO must investigate.

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Let's see the directors held accountable, as they should be. It appears the losses will be significant, with subcontractors and unsecured creditors carrying the can for poor goverance of Mainzeal. The directors should not be allowed to hold governance roles for at least five years. Fair and consistent treatment for all.

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Not filed accounts since 2007. What does that tell us?

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