Construction firm calls in receivers

Large-scale developer Mainzeal Property and Construction, until recently chaired by former prime minister Dame Jenny Shipley, has been placed in receivership.

The company’s sole remaining director, Richard Yan, made a request to BNZ for receivership, resulting in the appointment of Colin McCloy and David Bridgman of PwC as receivers today.

According to a statement from PwC, Mr Yan advised that a series of events had adversely affected the company’s financial position, coupled with a general decline in commercial construction activity.

In the absence of further shareholder support, the company could no longer continue trading.

The company employed upward of 400 staff.

Mr McCloy says the receivers are committed to “doing the best we can for the suppliers, staff and subcontractors of Mainzeal.”

The company forms part of the Mainzeal Group, which is owned by Richina Inc, a privately held New Zealand-based company with a strong China focus.

Companies Office records show several directors ceased holding office with Mainzeal in December, including chairwoman Shipley and former Brierley executive Paul Collins.

In 2011 the company won the RMB Commercial Project of the Year for its build of Lion Breweries' state of the art brewery in East Tamaki.

Joint venture 'safe'

Mainzeal recently formed a joint venture with planning consultants MWH to fix earthquake-damaged homes in Christchurch insured by Vero, AA Insurance and SIS Insurance.

MWH Mainzeal's programme manager of the Canterbury earthquake recovery, Chris Pile, told NBR ONLINE he was formally notified of the receivership this afternoon and it came as a shock.

"We certainly didn't see it coming and I don't have any details as to what the cause is or the magnitude."

The joint venture company, which project-manages earthquake repairs, has almost 200 staff, with about half employed by Mainzeal – one of many construction companies involved in the rebuild.

Mr Pile says there will be a staff meeting tomorrow morning.

"It's unfortunate for Mainzeal but as far as the earthquake recovery goes they're a relatively small player, in terms of the total contruction capacity available."

Mr Pile says MWH Mainzeal will work with the receiver to come to agreeable terms.

"If we can't come to an agreement with receiver then MWH has got the ability under the contract to take over and self-perform the whole thing."

Still, the receivership will be a jolt for Christchurch businesses as it was thought the rebuild was taking off.

One shocked company owner, who claims to be owed more than $250,000 by Mainzeal, told NBR ONLINE: "The thing is, now [the receivers have been called in] they will be paid and the bank will be paid but we won't."

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89 Comments & Questions

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Disappointing to read this in the paper and not to hear it from Richina. Why hasn't Richard Yan been communicating with Richina's shareholders?

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Yes. Also please try to imagine one Mainzeal site with 30+ staff and around 28 of them are useless! Waste of time and money.

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Totally agree with Richina shareholders thoughts, also Mainzeal home page also hasn't been updated with information or even a press release about this

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Wonder, what does it say about Richina as a whole, when the other entities in the group can't prop up Mainzeal? It looks like it's being ring fenced in preparation for being cast adrift.

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Mainzeal has recently finished building a new boarding house for St Andrews College, last company I would have thought to go under.

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Same arrogant Richard Yan who boasted he knew how to do business in China, but that proved to be a figment of his imagination.

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Never mind the shareholders, the management and staff haven't even been told yet! We heard it first from a friend at the newspaper.

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That's just typical of the Mainzeal communication and direction over the last few years headed by Peter Gomm. Mismanagment of this company has caused its failure, not the ecomomic climate. The core construction business made money and had future workload, but pipedreams drained the company.

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Agreed. Perhaps the Vineyard on Waiheke wasn't the smartest move. The downturn in the climate was pushed hard by Peter Gomm as the reason for the redundancies last year and even again last week. Sure to be more dirty laundry aired soon enough. Questionable motives as a director of King Facade being the elephant in the corner of the room..

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Construction - it's like heroine'. Absolutely fantastic when there is plenty of good gear around, but when there is a shortage you'd sell your own arm for a hit.

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Couldn't care less about Mainzeal as a company or, its director(s), only that its employees' wages and its creditors are paid in full. Bad management, full stop.

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I'm pleased I sold my shareholding well before the delisting and made good money.

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They couldn't run a bath ... just look at what happened with Vector.

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To some extent saw it coming, just never really believed it could happen. Finding out by email 2 hours after it was in the media I did expect as that's how the company operated, with no internal communication. This has far far wider reaching consequences for suppliers and subcontractors. One of whom has already said he will have to sell his house to cover the losses..... sad day.

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No wonder Shipley and Collins abandoned ship in December, only two months ago. They didn't know what was going on - yeah, right.
If they didn't know what was going on, they should not have been occupying the positions. Just haymaking while the weather is good!

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Politicians don't know how to run a monopoly (government). It should be no surprise they can't foot it in a competitive market place.

Sell signal - ex-MP being appointed to the board.

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Exactly why NZ needs the MOM model with the power generators... As well as all the other benefits that comes with it...

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At the end, all sub-contractors suffer the most.

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Think you will find it's everyone involved, including employees, who will suffer, not just subs. Everone has bills to pay.

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Ahh, but the difference is the employee will be paid before any unsecured creditor whereas the subbie will get nothing. I'm sure we will see sub-contractors fall over becuase of this and more people lose their jobs and everything else they own. Another good example of the Constructions Contracts Act not working for the sub-contractors, I bet.

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But employees might only lose their job and be out of pocket for a month or two, and they have some limited statutory protection. Subbies can be owed serious cash if they've kept working without getting paid (arguably their own fault, but not unusual to be owed, say two months' work, which could be $100,000 or more in some cases).

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Hey, this is just such awful news for us all. Mainzeal has been a fabulously positive and open construction company that has completed a whole lot of great projects.
Right across the country, and especially in Wellington, they have completed very successful major projects. Some of their senior project managers are as good as any in the business.
Obviously something has gone wrong at the top, but you have feel for all those highly capable and committed staff who are the backbone of the company.
Bugger!

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Outside Auckland the Mainzeal teams were first class. Tthe achillies heel was always the Auckland area and the corporate upstarts. A very sad day indeed!! Let Peter Gomm be remembered for this iconic company falling over under his watch.

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You need to understand that these people came to help rebuild a city not sink your company. You need to look a bit closer to home. You don't understand the scale that these professional people have worked on in there passed projects overseas.

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Shipley and Collins knew what was going on all right. Mainzeal could never be trusted as far as you could kick them. Just look at the leaky building claims filed against them.

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Any company that employs that many useless Poms will always sink!

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Is that you John WIlliams???

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You pr*ck. Us Poms, as you put it - most us gave up full-time jobs, and pay at a better rate than here, and only came to help will the rebuild in Christchurch.
The senior management, who are Kiwis, are cr*p and so far up their own a*ses, that they could not organise a p*ss-up in a brewery.

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I've worked for a number of large construction companies and find that most imports come here with superior 'screw the subbies' attitudes. You'll note that there aren't many Kiwis working for these organisations any more as most of us try to be honest, fair and try to build working relationships. I've yet to meet an import who feels they're going to be around long enough to bother with relationships. Before this collapse I had instructed my qs that we weren't to price any more jobs for Mainzeal after being treated like something the site imports had trod in. Excuse me for not being upset about you having to go home. If you'd like to contribute to the loss I've incurred with you assholes you might get some sympathy.

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Anonymous' post should be framed and hung in the boardrooms of all the national contractors. The most pernicious current import blight is the infestation of Brits masquerading as "Health & Safety managers", with zero construction knowledge and zero use.

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Most of the UK construction market still operate on margins of between 1 and 3 percent... Where the only way to increase profit is through VO's and often highly contentious and confrontational to get those VO's.

Under those circumstances/frameworks its no wonder the little guy gets totally screwed over. At least we have the Construction Contracts Act though.

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I left MZ few months ago - since they had no good work, which states enough in this ChCh market.

But for the record, there were just as many useless Kiwis. The reason I moved on (and up) was since MZ had way too many inexpericenced Kiwis who had been there since day 0000, dragging the company down in this vibrant market! Although I think this issue is more related with Auckland than ChCh business.

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You really are an idiot if that's all you can come up with. The senior management had no idea what time of day it was so had no chance of running a company.

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Unbelievable. If a company like Mainzeal can go under so quickly it means very serious questions must be asked at the very least. This great recession isn't over yet. My concern is for the workers and theirr families as well as the creditors who have shelled out in support of a company they felt was solid. For how long were all these people decieved?

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Nothing to do with the reccession. I'm a manufacturer in the building/construction indusrtry for 30 odd years,and its the worst recession I've ever known. You cut your cloth to suit your sails. I'm in Auckland and recently taken over the day to day managment of a business up to its eye-balls in debt, but now growing and about to take on more staff,.

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Maybe they got out Before they had to pay Waitangi Tax.....

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Hopefully NBR will look closely at how Mainzeal has restructured its assets over recent months.
It will be great to see whether the shareholder really did look after itself at the subcontractors expense.

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Not one person feels for the company,its sad in this country that a company that employed thousands of people over the years go to the wall. Comments are whos fault it is.Read what happened then judge not mouth off in the first few hours or maybe you people are really clever then ring the recivers they will be pleased to hear from you..

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I trust Mainzeal will be honouring commitments to us sub-contractors who are owed money. How can directors believe they can cease holding directorship one month before going into receivership and think they can get away with no liability.
The company has obviously been trading insolently for some time, which is illegal. I look forward to receiving all funds owed, as I have personal guarantees that must be honoured. If not, the past 20 years of my working life will have been wasted. Their director and former directors should loose their assets due to poor decision making, not mine.

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Yeah right!

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Read the Companies Act 1993. Trading while insolvent is not an offence in NZ. The offences are trading recklessly (section 135) and taking on obligations without the means to meet them (section 136). These offences can occur even if the company was solvent. Thus the directors' responsibilities are much wider than merely ensuring the company is solvent, which is only a requirement for paying dividends or other distributions to shareholders. Unfortunately, the accounting and legal professions talk too loosely about insolvency in NZ.

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OK, if what you're saying is correct they must have been trading recklessly as they obviously weren't solvent enough to meet contract obligations that they were signing subcontractors too. Either way, they must have some form of liability. These guys ruin more people's lives than the criminals who hit someone over the head and get 10 years.

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Without checking the Act, (and I stand to be corrected), I thought trading whilst knowingly to be insolvent, is an offence under the Act..??

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No it is not. It is probably trading recklessly though, which is an offence.

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Appoint a liquidator and tell them to go for it. The liquidator will work out if the directors were out of line, not a receiver. The receiver just pays secured creditors.

Business is about taking risks. Risk means you might fail, it is the other side of making a profit. Everyone likes the profit but ignores that it always involves risk. Things can change on directors, that does not make them crooks.: appoint a liquidator and find out ..

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Sorry to hear about your loss of jobs employees, but try losing $60k to these bunch of professionals.
I won't be doing any more more for any of the large construction companies as they expand their empires when the times are good and have no idea what measures need to be taken when times get tough.
These directors need to be tried for operating a insolvent business.

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See my comments in reply to #21. The issue of insolvency is widely misunderstood in NZ.

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Including by you by the sounds of it....

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Talk to your accountant/lawyer about your options

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NZ law allows this to happen far to easy, what a joke. They will be up and running again tomorrow. Where is the accountability?

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It shows how bad a company is run when, after reading the events on Stuff, I shot down to site to pick up all my tools and was greeted by Mainzeal PM and staff. I told them what had happened. I felt sh*t and they felt worse. Shame on you, Mainzeal, shame.

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An ex-primary school teacher and a wide boy who nearly sent BIL broke with the purchase of the Thistle hotel chain. Not exactly top-shelf leadership pedigree who were at the helm of Mainzeal, until a few months ago, when they jumped ship.

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employee # 3 ?? Is that you, John Williams?

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Mike Turner running projects along with senior qs knew months ago the company was in the sh*t. Disgraceful. I have lost $100k due 20 of this month. Wife, three kids and six employees. A*sehole Gomm.

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I think you'll find only Mainzeal's directors, shareholders and accountants knew this was coming. Their employees, even the senior professionals, wouldn't have known.

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Agree 100% the directors and former directors have to be tried. This affects so many subcontractors, supply firms and workers, in many cases ruining their lives. Let's see some director's wealth disappear!

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Mainzeal has been trading for at least six months unable to pay their debts when they fell due. Mainzeal has juggled money, have stated they have hurt on the Siemens/Transpower -HV Power Project, which has impacted all subcontractors working for them around the country.

I would suggest the directors know far more as Mainzeal has been in trouble for some time. It's illegal to trade insolvently and directors have a duty under the Companies Act.

The impact on the NZ construction industry of this will be significant when it is already facing significant challenges.

Surely Mainzeal is too big to let fail as they will take hundreds of small subcontractor companies with them, just like when Hartner Construction failed.

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You are not correct in your comments about trading while insolvent and the Companies Act. See my comments in reply to #21 above.

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Mainzeal has been in trouble for six mths. It has been talked about in the industry between subcontractors and money has been juggled around.

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The Mainzeal South Island construction division was not a stellar performer. You only had to look at their website to see that they were only working on smaller projects and having to compete with firms a fraction of their size, without their elephantine overhead and inertia.
A number of their senior staff in Chch have jumped ship to Leigh's last year, taking their extensive knowledge of how to stiff arm subs and suppliers there. As a result, Leighs now have a number of subs / suppliers that don't work for them. Those staff must have known something.
Project wise, profit making was completely optional, and many of their recent staff imports didn't cut the mustard job-wise. There were a number of stinkers, but the best (worst) of them all was the Benmore HVDC project in 2011 that was a complete and utter shambles. It destroyed their credibility with Transpower and lost them a substantial fortune.

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Well, what a job to unravel this mess. Poor old subbies suffer again. Receivers will be rubbing their gready little hands together. Keep your peepers on the receiver's updates, guys. Their fees will eat up every penny you are owed. No sleepless nights for the rats that ran from the sinking ship. Good luck subbies and suppliers. Aussie here we come!

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Someone may buy them?

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Jenny Shipley as chairman. What a joke! Disgraceful to see a good company fail so badly.

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As employees, we weren't even worth being told first, had to hear it on the radio. You f*ckers must of know this was coming. Shame on you Peter, shame on you Richard. How do you both sleep at night? I might be out of a job but our subcontractors could lose everything, you wa*nkers.

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Nothing shocking here. Mainzeal have not had a good reputation for the last 20 years. Their senior management, at best, has been introspective and small-minded and the quality of workmanship has always suffered to the profit margin. This company was dead and just didn't know it. As for having Jenny Shipley on the board, bad mistake - a member of the same government that undermined trade training and support to this very day, to the detriment of all New Zealanders. Same government that turned health care into a bureaucratic money pit. Enough said!

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And how much money does the parent company Richina have? Richard Yan should be made to clear all debts or bugger off back to China. Your name in NZ business is now shot! We employees may be out of a job but I really feel for the subcontractors who will lose their businesses.

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Fletchers, the market is all yours...regrettably.

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This will be a wake-up call for the whole construction industry that you can't buy jobs at 2-3% margin and then screw the subbies when you lose that margin because of Mainzeal stuff-ups. We always allowed a Mainzeal factor when pricing work to them because of their arrogant attitude towards us subbies. We are exposed for a couple of hundred k but will survive it. Hundreds won't and even though it's our opposition that will sink I feel sorry for them.

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If Mainzeal can go under in this construction environment then this makes me a little nervous. I think there are bigger power players here steamrolling over the rest....

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Staff, suppliers and sub-contractors all adversely affected - and some to a horrendous degree - so no wonder so many are feeling terribly bitter. Just to add to the laundry list, there are thousands such as myself who are depending on this crowd to manage the repair/rebuild of our severely earthquake damaged houses. We had already been told that work wouldn't commence until 2015! The insurers (Vero Group) will now have to re-negotiate a fresh contract with some other party, giving them another excuse for even further delays. Their performance to date has certainly given me no confidence in them, and it's now anybody's guess when we will get something done. What a shambles.

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So glad I trusted the market chatter and stopped trading with these monkeys a few months back... Lost in excess of $400k when Hartners went under and still struggle to see Wayne acting like it never happened. As usual, it's the small honest businesses that will suffer here. Good luck to those that will really feel the impact.

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The industry knew they had major problems with legal action being taken over leaky buildings. $40m claim against them at Botany Downs, plus about another 10 apartment blocks, reclad costs rumoured to be $5m to $15m each. Our lawyers advised us that Mainzeal were unlikely to be around when our leaky apartment building claim was heard but we filed in the High Court anyway - no need to pay lawyers any more! As a subbie I've lost over $150k. Tough when you are operating in a market with no margin.

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Maybe the government needs to underwrite all funds associated with works in Christchurch due to the shaky construction sector. This government is propping up other organisations.

The days of subcontractors taking all the risk are over.

Mainzeal do have a lot of very good Kiwi guys and we have found them pretty good to work with the last three years, despite their cashflow problems over the last few months. Feel for their staff - lock up the directors.

I must agree that most UK import project managers and supervisors in all the major construction companies, including Fletcher's and Hawkins, treat subcontractors badly. Especially Hawkins - we will never work for them again, and we are one of the many as the word is spreading.

Time to wake up, Hawkins.

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Typical mentality - always blame the builder. Don't agree with how Mainzeal have dealt with this but they were a great company to work for. There definitely wasn't a screw the subby culture just a tough market to win work and no margins. Subbys choose to take on tight projects. What people don't know about Vector Arena is that the local govt made them do it as Hawkins withdrew their offer. It was always a sinking ship but how do you say no to a major client and future work.

"Future income"... Oh, the irony.

Anyone looking for work move to Aus!

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Gee whizz, who was prime minister when cr*p buildings were going up all over Auckland?

Goodness, so much innovation and leading-edge thinking in this town. Next thing we'll be having real building codes and building inspectors to enforce them. Such silliness!

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Should never let Martin Fahey go...

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Agreed!!

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A good example of the division that has always existed within and held the company back. Too much bickering and not enough building.

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Don't forget Shipley also lowered the drinking age to 18. A real achiever.

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Mainzeal was a real company under Peter Menzies and Alan Coutts. This new breed, Gomm and Yan, have no experience, and the same must go for the spineless board.

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Can we expect a raft of class action lawsuits to be filed against the executives of this lamentable company and its directors, Messrs Yan, Shipley, Collins and Tilby ?

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Where did all the money go?

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Interesting ... according to Companies Office, Jenny Shipley and the others leaving the sinking 'Mainzeal' ship, did so on 5th February 2013 at 15:20 in the afternoon.

Check it out.

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Learn how to use the website.

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My $363k invoice is worth less than a toilet paper.

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When was the company formed?

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Apparently a shareholder pulled $10m out few months back. He has effectively stolen all of our money.

He is as bad as these finance company guys.

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Mainzeal building uncertainy.We worked on Geyser first 6 green star rated building in NZ and only one.Job completion was March they where still going for it in September under penalties all that time.King Facade stuffed them around and they spent too much time digging out and forming carpark on site.Macreenie had the Job originally with MZ undercutting to get the project and bought in a host of Asians to do glazing.Took too long and lost a packet and organisational skills poor.

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So between Vector Arena, Scene Apartments, Geyser building and the leaky buildings, it sounds like the site and project management and subbies over the last 5-10 years stuffed the company, not the senor mgmt. Shame of the the staff of Mainzeal - you guys b*tching above need to look in the mirror??

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