Director wants Mainzeal liquidation put on hold

HAMISH MCNICOL
Last updated 05:00 12/03/2014

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The former parent company of collapsed construction firm Mainzeal has urgently sought a "holding position" on its liquidation, a week after the High Court ruled in the liquidator's favour.

Depending on the outcome, the case could see see the liquidator able to pursue potentially tens of millions of dollars for creditors.

Last week Justice Brendan Brown declined Mainzeal Group's sole remaining director, Richard Yan, a stay of execution on the liquidation of Richina Global Real Estate (RGREL).

Yan was also the sole director of RGREL, which was Mainzeal's parent company until six weeks before the construction company's collapse in February last year.

Mainzeal was placed into receivership by Yan, with more than 2000 creditors lodging claims.

The company was now thought to owe unsecured creditors more than $138 million.

RGREL was later put into liquidation on February 27 this year, with BDO appointed liquidators last week.

But Yan was appealing RGREL's liquidation separately and yesterday sought a "holding position" on its liquidation as part of the wider Mainzeal Group.

This would effectively mean it could not be acted on, pending the outcome of the appeal.

Yesterday Yan appealed the High Court ruling on RGREL, less than a week after it was made.

For now, the liquidation remains on hold after the Court of Appeal reserved its decision.

Yan's lawyer, David Chisholm, QC, was arguing BDO had a conflict of interest in liquidating RGREL at the same time it liquidated the 12 other Mainzeal Group companies.

It would gain access to the parent's records which could benefit other companies BDO was dealing with, he said.

"The interests of creditors and contributors of RGREL are quite different to the interests of the creditors and contributors of Mainzeal."

He sought for the Court of Appeal to put the company in a "holding position" pending the result of its appeal against its liquidation.

On December 31, 2012, Mainzeal Property's shares were transferred from parent company RGREL to another company, Mainzeal Group. But prior to that Mainzeal's accounts showed it was owed about $15m by RGREL.

Another $5.78m had also been awarded as part of the "pooling orders", which RGREL owed to its subsidiary King Façade.

BDO liquidator Andrew Bethell said the inter-company transactions suggested BDO needed "full information and transparency around that company" to understand the wider picture.

BDO's lawyer Zane Kennedy said the interests of the creditors required liquidations to proceed.

The investigation was ongoing into the group's collapse and RGREL's books and records were critical to that process.

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"The public interest lies clearly in favour of allowing the liquidation with restraint [Justice] Brown put in place", Kennedy said.

- BusinessDay

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