One of New Zealand's largest commercial builders, Mainzeal, has collapsed into receivership, a victim of the high costs of repairing leaky buildings, according to industry sources.
After more than 40 years in business, the failure came as a bolt from the blue, putting more than 400 jobs on the line.
Mainzeal Property and Construction is probably the third-largest construction company in the country behind Fletcher Building and Hawkins Construction.
Parent company Mainzeal Group was not put into receivership. But the independent group chairwoman, former prime minister Dame Jenny Shipley, said she and three other directors, including former Brierley Investments boss Paul Collins, had resigned from the company board on Tuesday.
Shipley said the company had gone through "a very difficult year in the construction sector". The independent directors had done everything they could to "avoid this painful outcome", she said.
A source said Mainzeal had been effectively "killed off" by leaky apartment buildings it was repairing, some of them costing many millions each to fix.
Mainzeal had been involved in their construction within the past decade, but ended up as the "last man standing" because others involved, such as architects and designers, had already folded, the source said. Mainzeal and the councils were the only ones left to pay for repairs, the source said.
One Auckland apartment building, Hobson Gardens, with 97 apartments near the central city, is being reclad at a cost earlier estimated at $15 million.
Last year, a $10m-plus leaky-building claim lodged by former Wellington mayor Kerry Prendergast and other residents in a luxury Oriental Bay apartment block was settled on the eve of a High Court case. The lawsuit was being taken against Mainzeal Property and Construction, and others.
Some subcontractors in Auckland had not been paid by Mainzeal and had recently walked off the job, the source said.
In a written statement, Mainzeal director Richard Yan said that after "a series of events that had adversely affected the company's financial position" and a general falloff in commercial construction work, the company could no longer continue trading.
Christchurch had been expected to be Mainzeal's "saviour" but the commercial work had been too slow in coming to save it, the source said.
Yesterday, PWC partners Colin McCloy and David Bridgman were appointed as receivers for Mainzeal and associated entities.
Mainzeal is part of the Richina Pacific group of companies, which also has a leather-making business in Shanghai and an aquarium in Beijing.
One source said they were concerned about whether staff would get paid today.
It is not clear what will happen to staff, but it is possible Mainzeal could continue trading in receivership and carry on with some existing profitable work. Alternatively, other construction companies could pick up work and re- employ Mainzeal staff and subcontractors to complete projects. Staff will stand ahead of unsecured creditors such as subcontractors and suppliers.
Receiver Colin McCloy said the receivers were committed to doing the best they could for suppliers, staff and subcontractors of Mainzeal.
- © Fairfax NZ News
With festive flags and trees out this year, is council killing Christmas?Related story: Council takes the cheer out of Christmas