Legal action against directors not ruled out – Mainzeal liquidators

Mainzeal’s liquidators say they can only speculate about any possible legal action against the construction giant’s directors.

Questions about possible legal action against the directors or involvement from the Serious Fraud Office were put to Brian Mayo-Smith and Andrew Bethell of BDO Auckland at yesterday’s creditor’s meeting in Auckland. 

Mr Mayo-Smith told NBR ONLINE he can really only speculate about any possible legal action following the Waitangi Day collapse of what was the country’s largest construction company.

“We have not contacted the SFO nor have they been in contact with us,” he says. “And at this stage there’s nothing we have seen that we believe requires investigation by the SFO.”

But he points out BDO is only one month into unravelling the books of the 12 Mainzeal companies in liquidation.

“We don’t rule it out in terms of what might happen down the track, but nothing has come to light so far.”

The focus of liquidator’s investigations was inter-company debts and group restructuring that took place in December 2012 and a year earlier in 2011, Mr Mayo-Smith says.

“Those are things we need to look at in terms of were they appropriate and did they disadvantage creditors in any way.”

Among the labyrinth of related-party transactions within the Richard Yan-headed Richina group is a $27 million amount due to Mainzeal from Richina Pacific (China) Investments Limited (CHC).

Chinese-born Mr Yan is the prominent shareholder of the limited partnership, Richina (NZ), which owned Mainzeal Property & Construction before its receivership. He founded the RIchina group of companies that that brought Mainzeal into its fold in the mid-1990s.

Mr Yan, a Mainzeal director, was not at yesterday's meeting at the Ellerslie Convention Centre and has so far maintained a silence around the company’s failure attributed to its main shareholder withdrawing the financial support necessary to make repayments on a $20 million Bank of New Zealand facility.

Mr Mayo-Smith says Mr Yan is co-operating with liquidators, but he does not know when he will front up to talk publically about the company’s failure. “It’s up to him.” 

All directors, including former prime minister Dame Jenny Shipley, former Brierley man Paul Collins, Clive Tilby and Peter Gomm, declined the invitation to attend yesterday’s meeting.

Mainzeal Property and Construction collapsed into receivership on Waitangi Day, with receivers from PwC appointed to the interests of secured creditor BNZ.

BDO was subsequently appointed to the company and several other related companies. Its next liquidator's report is due in September.

Unsecured creditors have so far made claims for $93.5 million and Mr Mayo-Smith says that is only likely to increase.

A committee of Mainzeal creditors is being formed and names of its members will be posted on the company’s website this afternoon.

The group will assist creditors with their investigation into the reasons for the group’s failure.

gbond@nbr.co.nz