Stonewood Homes franchisor, Stonewood Christchurch in receivership
Stonewood Homes Ltd owes about $15 million to unsecured creditors and is part-way through building 110 homes, say receivers KordaMentha.
In a statement issued on Tuesday afternoon, KordaMentha partner Grant Graham said the firm hoped to contact creditors within the next 48 hours and update home owners on progress of their individual builds by the end of this week.
It was hoped Stonewood could be sold as a going concern.
The receiverships will not affect any of the other independently owned Stonewood franchises.
Are you affected by the receivership? Email Georgina.Stylianou@fairfaxmedia.co.nz
Graham confirmed KordaMentha had been appointed receivers of both Stonewood Homes Ltd and Stonewood New Zealand Ltd (the master franchisor of the Stonewood Group).
Graham said that prior to receivership, Stonewood's recapitalisation process was well advanced bringing hope "this interest can be converted into a sale of the business and assets in the short term".
"Clearly, this would be in the best interests of all affected parties, including the 85 staff."
He said it was an anxious time for those building with Stonewood. "Therefore, we are working as quickly as possible to conclude a detailed status review of each build. This will take time to complete, but we believe we will be able to update owners on progress by the end of this week."
He said unsecured creditors were understood to be owed "approximately $15 million". No information was provided on the size of the companies' secured debt.
STONEWOOD ONE OF CANTERBURY'S LARGEST BUILDERS
Ashlee King and her partner decided to build their first home with Stonewood Homes in the Silverstream Estate in Kaiapoi, north of Christchurch.
"Last week we were told everything was fine in the company and it was in the processes of becoming a 'stronger company'," she said.
"All of a sudden no-one in the company will answer their phones and we read in the news they're in receivership [and we have] no idea what this means for us," she said.
King wanted to get her deposit back. The experience had "ruined the excitement of our first home", she said.
A source close to Stonewood Homes, who did not wish to be named, said staff had a meeting with receivers KordaMentha on Tuesday morning and were asked not to speak to the media.
The source said 110 homes in Christchurch were under construction, but there were many more in the pre-construction stages.
CONTRACTORS OWED MONEY
Glen Taylor, co-owner of fencing hire company ATF Services, said Stonewood Homes owed the business about $50,000.
The debt dated back to October last year, he said.
Taylor knew of 88 Stonewood Homes sites around greater Christchurch that were fenced off and under construction.
"They'll be more where the fencing has been removed... but they're not finished and handed over to the homeowners," Taylor said.
Chris Hughes, manager of Switched On Property Maintenance, said Stonewood Homes owed his company about $15,000.
He believed "we're just a small part of this pie".
"There's other, much bigger, creditors," he said.
Hughes said the company stopped doing work for Stonewood Homes a couple of months ago after hearing rumours "things were going south".
"Clients have contacted us and said they would pay us to finish off their house. It's not ideal at all and you feel terrible for the clients."
CUSTOMERS' FEARS REALISED
A Christchurch Stonewood Homes customer, who did not want to be named, said he signed a building agreement with the company in April last year and paid the required $20,000 deposit.
He had sought multiple assurances from Stonewood after hearing rumours about the company's financial position.
"We continued to receive assurances from the sales consultant as late as Monday last week."
He said his family was paying two mortgages – one on the section and one on their current home.
Stonewood Homes had lodged a consent application with the Christchurch City Council but it had not been paid for.
"We expected to already be some way through the building process.
"We've spent 15 months designing and planning our dream home and we now expect we're back at square one to start the process again."
Ray Brown said the stormwater drain was not properly connected and he had waited two years for Stonewood Homes to paint his front door.
"Our inside front window sagged and got jacked up but [it] cracked the seals so now when it rains or [we] water the garden, water comes inside."
Brown said his calls often to Stonewood often went unanswered.
Another customer, who is building his first home and did not wish to be named, said no substantial work had been done on his house since the start of December.
He had little confidence of moving in by the April deadline he had hoped for.
"I just want out to be honest, I've had enough."
He said he was told on Friday some materials would arrive on Monday, but Stonewood did not have a contractor to install it.
He was concerned he may have to pay back or extend a Home Start Grant, which required clients to be in their newly built home within a year.
STONEWOOD HOMEOWNERS HAVE MASTER BUILD GUARANTEES
Registered Master Builders Association (RMBA) said while it was regrettable that Stonewood Homes in Christchurch had gone into receivership, all Stonewood Christchurch homeowners had Master Build Guarantees, therefore all of their homes would be completed.
Association chief executive David Kelly said: "We will be working with the receivers - KordaMentha - closely to ensure that while they work on behalf of the secured creditors, we will be doing our best to ensure that the guarantees are not compromised so the homes are completed.
"We will help KordaMentha find RMBA members who can take over the contracts. This could take some time to sort out."
He advised homeowners not to contract new builders, as the original Stonewood Homes building contract had a guarantee, which was owned by the receivers, Kelly said.
"We will be discussing with them the best way forward for the homeowners and helping them find RMBA members who are able to take over the contracts."
RMBA was in the process of contacting all of the Stonewood Homes Christchurch homeowners to inform them of the process and ensure - in the short term - they did nothing to compromise their rights under the guarantee, Kelly said.
The association was also working with Stonewood Homes Hamilton homeowners, he said.
"It is because of unfortunate circumstances like this receivership that RMBA developed the Master Build Guarantee.
"From time to time, regrettably businesses fail," he said.
"RMBA is committed to supporting its members with programmes that help them run better businesses, unfortunately this does not mean that failure does not occur."
Earlier this month, Stonewood Homes NZ chief executive Warwick Isaacs said its Christchurch branch was in the "final stages of reinvestment" and warned customers of potential building delays. Isaacs would not comment on the matter on Monday.
Former richlister and Christchurch International Airport boss Jim Boult resigned as a director of the three in-receivership Stonewood companies Stonewood Homes Christchurch, Stonewood Homes and Sterling Homes at the start of February, according to Companies Office records.
Boult said at the time: "I simply had a conflict of interest so it was time for me to leave."
Stonewood's Hamilton franchise went into liquidation on January 13, owing $1.46 million to creditors.
The company's Marlborough branch went into liquidation last year owing more than $1m.
COMPANY DOWN, DESPITE CONSTRUCTION BOOM
More often than not, building firms crumble under the pressure of a construction boom, Registered Master Builders Association (RMBA) chief executive David Kelly said.
"More companies get into trouble on an upwards spiral, than a downwards spiral."
Building consents for homes and apartments hit a 11-year high in 2015.
Figures from Statistics New Zealand show a total of 27,132 new dwellings were given the green light last year - up 9.8 per cent from 2014.
The 2015 total was the highest since 2004, when 31,423 new dwellings were consented.
While Kelly did not know the reason behind Stonewood Homes receivership, he said staying afloat during a construction boom was difficult.
"What can happen when we get a construction boom is businesses take on more work, but they've got fixed prices with their clients, but costs keep going up...
"All of a sudden they realise 'I've got a cash flow problem'."
Increasing costs could involve sub-traders and building materials, he said.
Kelly did not believe the master franchisor collapse would have too much of an effect on the regional branches.
"From what we can tell, there is not going to be a big ripple effect."
RECEIVERS 'WORKING AS QUICKLY AS POSSIBLE'
Stonewood Homes NZ is the master franchisor for the Stonewood Homes network. Stonewood Homes Ltd holds the Stonewood franchise for Christchurch.
KordaMentha said the receiverships did not affect any of the other independently owned Stonewood franchises operating throughout New Zealand.
"Having just been appointed, we are working as quickly as possible to establish the companies' financial position and a path forward for the receiverships.
"We will communicate with all affected parties as we work through this process," Graham said.
The Stonewood Homes franchise was established in 1987 by Brent and Sue Mettrick with 21 franchise locations across New Zealand. It has built close to 6000 homes since then.
Brent Mettrick has not returned calls.