Mainzeal-related liquidation halt bid fails
Mainzeal's liquidators have won a High Court battle to liquidate the construction firm's former parent company.
But the battle is not over, with Mainzeal Group's sole remaining director, Richard Yan, planning to take the decision to the Court of Appeal.
Yan sought a stay of execution on a liquidation order for Richina Global Real Estate (RGREL) because the matter is under appeal. Yan is also sole director of RGREL, which was Mainzeal's parent company until six weeks before the construction company's collapse.
His lawyer, David Chisholm, argued that BDO - the liquidators of Mainzeal Property, Mainzeal Group and 11 other related companies - was too conflicted to liquidate RGREL as well.
It would have access to RGREL's records which could benefit other companies BDO was dealing with, he said.
But BDO's lawyer, Zane Kennedy, argued that once the courts had permitted a liquidation to be executed, it usually took place immediately and the clock could not be turned back.
Kennedy said the liquidators had a duty to find out what caused the collapse of the construction firm, now thought to owe unsecured creditors more than $138 million.
"We believe it is in the interest of creditors of the Mainzeal Group and the wider group for the same liquidator to be over both companies," BDO liquidator Andrew Bethell said afterwards.
Records showed that shortly before Mainzeal Property's collapse, its parent company was RGREL. But on December 31, 2012, the property company's shares were transferred to another company, Mainzeal Group, Bethell said.
Prior to that, Mainzeal's accounts showed it was owed about $15m by RGREL.
BDO has been awarded "pooling orders" to have that money and another $5.78m that RGREL owes its subsidiary, King Facade, effectively earmarked for creditors.
The pooling orders are being fought by RGREL and Justice Brendan Brown said in his ruling today that the liquidators must not enact those orders while the matter remains unsettled.
Bethell said it was not clear just what RGREL still owned in terms of assets.
However, the inter-company transactions suggested that BDO needed "full information and transparency around that company" to understand the wider picture.
Mainzeal was once a subsidiary of listed company Richina Pacific, which is now registered offshore but retains tannery and property interests in China.
BDO said late last year it was chasing RGREL and a related company in China for nearly $50m, alleging related-party loans and invalid restructuring manoeuvres.
Bethell said another Mainzeal creditors report would be released in a fortnight.