Failed building firm unable to pay debts

Last updated 05:00 21/09/2011

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Bust builder Sovereign Homes' creditors, including many building and construction companies and suppliers, will not receive any of the more than $4.25 million they are owed.

Sovereign Homes New Zealand, which covered the upper North Island, was liquidated in March. Its directors blamed the economic climate, decline in orders, greater competition and the failure of related parties – including Sovereign Homes Limited – to repay advances for its failure.

A liquidator's report released on Friday said there "will be no funds available for distribution to any class of creditors".

Sovereign Homes New Zealand owed $123,134 to preferential creditors, including staff and IRD when it collapsed in March.

General security holders were owed more than $1.9m while unsecured creditors – many of them builders, contractors or suppliers based in Auckland and Northland, were owed more than $2.3m, the liquidator's first report said.

The six-monthly report by liquidator Accru Smith Chilcott said it had received 81 formal claims from unsecured creditors totalling more than $1m. Only $1502.58 remained in the company's bank account. Sovereign Homes had $84,137 on hand at the time of its liquidation.

More than $71,000 had been paid out in the six months to September, the report says, with the majority, $44,000, paid to the liquidator.

The liquidator said debts had proven difficult to collect. At liquidation Sovereign Homes was owed more than $4m by related parties.

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- BusinessDay.co.nz

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