Erceg's creditors left high and dry

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Financially troubled Ivan Erceg is teetering on the edge of bankruptcy and is unlikely to repay the $40 million he owes unsecured creditors of his former yacht-making firm, Sensation Yachts, according to the company's liquidator McDonald Vague.

There are "no funds whatsoever" available to repay the unsecured creditors, mainly made up of small businesses, McDonald Vague's Jonathan Barrett says.

A report from the firm's receiver, Peter Jolland, shows that a total of 140 creditors are chasing Erceg.

Barrett says only the preferred creditors  Inland Revenue (owed $87,106) and former employees (owed $76,312)  are likely to be paid.

Sensation Yachts, which in its hey-dey built luxury pleasure craft with a staff of 400 people at its West Auckland yard, ceased trading in November last year and went into liquidation in July.

Erceg has been served two High Court bankruptcy proceedings in the last two months, by Hong Kong Shanghai Banking Corporation (HSBC) and Cayman-Islands registered company Balenia.

McDonald Vague says it has struggled to get information from Erceg as part of its investigation of the company, even though he has a duty to answer the liquidator's questions. It estimates Erceg owes just over $40m to unsecured creditors. This differs hugely from the receiver's report, which includes a list Erceg compiled showing unsecured creditors are owed $636,542.

Jolland's report states Sensation Yachts owes just over $67m to preferred and unsecured creditors (not including the $40m of debt to unsecured creditors estimated by the liquidator).

Erceg claims to have security of $63.5m over the company, of which about $50m was underwritten by his late brother's estate. (Erceg's late brother Michael founded Independent Liquor, which was sold for $1.25b to private equity groups in 2007).

Dorchester Finance, which supported HSBC in its bankruptcy proceedings against Erceg, has security of $3m over a yacht built by Sensation Yachts which is docked in Auckland's Viaduct Harbour.

Sensation Yachts has assets with a book value of about $14m, but these may have plummeted in worth to only $3m, according to Jolland's report.

A United States organisation lent $8m to the company, but this is subject to pending legal proceedings.

There are $1.1m of funds in escrow, but these are subject to an arbitration process, Jolland's report says, and relate to a vessel that Sensation Yachts built for Darby Maritime.

Three partially built super-yachts are sitting in the Sensation Yachts yard, as part of a five-year contract with Balenia.

Balenia lodged bankruptcy proceedings against Erceg in the High Court at Auckland last month. (NZ$30m) for the yachts. and the hearing is expected this month.

Erceg is said to be living in a mansion owned by the Erceg family trust in the south of France.

- © Fairfax NZ News