Mainzeal creditors fear conflict of interest

MARTA STEEMAN
Last updated 05:00 03/04/2013
CREDITOR: Tim Smith, managing director of Smith Crane and Construction, wants to change the liquidators of Mainzeal Property and Construction.
KIRK HARGREAVES/Fairfax NZ
CREDITOR: Tim Smith, managing director of Smith Crane and Construction, wants to change the liquidators of Mainzeal Property and Construction.

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Some creditors of failed Mainzeal Property and Construction want to oust the liquidators, appointed by Mainzeal's shareholders, at today's creditors' meeting.

Scores of creditors are expected to turn out at the first creditors' meeting in Auckland today.

The replacement of the liquidators will be one of the main items on the agenda.

Andrew Bethell, Brian Mayo-Smith and Stephen Tubbs of BDO were appointed liquidators by Mainzeal at the end of February.

The collapsed construction firm is one of the largest in New Zealand and faces at least $93.5 million of claims from unsecured creditors.

The former directors of the failed construction firm were to be invited to the meeting but it is unknown whether they will front. They are Auckland businessman Richard Yan, former prime minister Jenny Shipley, former Brierley boss Paul Collins and directors Clive Tilby and Peter Gomm.

The other key vote will be nominations for a creditors' committee to work with the liquidators.

Christchurch accountant Rhys Cain said it was hard to replace a liquidator. A resolution at a creditors' meeting required more than half the number of the creditors eligible to vote to do so and the vote had to represent at least 75 per cent of the value of the claims.

These were high hurdles. The aim of the voting method was to balance the power of big creditors with that of many small creditors.

"It doesn't happen often [replacing the liquidator] and when there are a large number of creditors it is difficult to change a liquidator at a creditors' meeting," Cain said.

Canterbury creditor Tim Smith, of Smith Crane and Construction, owed about $1.5m by Mainzeal, said yesterday that he was not going to the meeting but had given his vote to a trade organisation representing him and others.

Because Mainzeal went into voluntary liquidation and BDO was appointed liquidator by Mainzeal there was the opportunity for creditors to vote for a different liquidator. Some creditors felt BDO could have a conflict of interest being appointed by Mainzeal and they were previously auditors for Mainzeal.

"All the creditors get to vote on whether to give BDO the push or not and get a different liquidator in. We'll probably vote to get rid of them. We think there is a conflict of interest there," Smith said.

Graham Burke, of the Specialist Trade Contractors Federation, was gathering proxies from creditors yesterday for the meeting.

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The federation was nominating Andrew Hazelton, a specialist in construction and contract law, for the creditors' committee.

Burke expected suppliers to turn up as well as contractors. "I expect that there will be a few people there who want to vent their displeasure with what has happened."

Other trade organisations would be representing their members as well, such as the Electrical Contractors Association and Precast New Zealand.

- BusinessDay.co.nz

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