Pike River can't pay compensation - receiver

CATHERINE HARRIS
Last updated 11:43 05/07/2013

Relevant offers

Industries

It's dollars to doughnuts as Ford NZ boss Corey Holter is a happy man Kiwi Property buys Zone 7 retail site in Westgate Air New Zealand and Air China alliance cleared for take off Gas price to go up for residential customers in October Extension of UFB network to be completed by end of 2022 Beekeeper unsure what summer will bring Tourism core part of Canterbury economic strategy Flexi Buy truck shop former director Vikram Mehta charged by watchdog Kiwis keeping partners in dark on finances New agency to unlock potential of $1b worth of Auckland Council land

An order of compensation for the families and survivors of the Pike River mining disaster may be sentiment only, as the company does not have enough money in the kitty, Pike River's receiver says.

In the Greymouth District Court today, Judge Jane Farish awarded $110,000 per victim to the families of the 29 victims and reparation to the two survivors.

But receiver John Fisk of PricewaterhouseCoopers says Pike River Coal Ltd has only $500,000 in available funds and $156,000 in leftover insurance money.

He said that in cases where companies in receivership do not have enough money to pay compensation, the liability may have to be written off. Any fines would not even considered claimable under the creditor process.

''Any reparations become an unsecured claim against the company so if there isn't sufficient assets to pay the creditors, which is the case here, then unfortunately, there isn't money available distribute.''

Unsecured creditors are currently owed $31 million, with another $20.5m owed to Pike's major shareholder, New Zealand Oil and Gas.
Questions remain as to whether the Government might step in to provide compensation for the victims of the 2010 mining disaster now that the legal avenues have largely exhausted.

Fisk said in some situations, compensation can be sought against company directors. Former chief executive Peter Whitall is about to face several health and safety charges laid by the Ministry of Business, Innovation and Employment. But other directors remain uncharged.

At present he could see no avenue for the families to be paid.

''It's an unfortunate situation but that's the commercial reality of it.''

Yesterday Judge Farish said the amount left for compensation in Pike River's books was ''just ridiculous,'' considering a recent case where a worker who had lost their foot had been just afforded $40,000.

She awarded compensation at the higher end of what MBIE recommended, which was reparation between $60,000 and $125,000 for each victim's family.

Pike River has had two insurance payouts. The $156,000 referred to by the judge is left over from a public liability policy taken by the directors.

An $80m payout from a second insurance claim made by the receivers for material damage and loss of profit had been put into the company's account to pay creditors. NZOG had allowed a partial payment to unsecured creditors, Fisk said.

Ad Feedback

- BusinessDay.co.nz

Special offers

Featured Promotions

Sponsored Content