Store goes bust owning council $265,000
Nelson ratepayers are $265,000 out of pocket following ticketing agent Everyman going into liquidation.
The company, owned by Greg Shaw, failed to pay proceeds from ticket sales for the 2012 Nelson Arts Festival and events over the summer of 2012-13.
The debt was accumulated over a six- to eight-month period and totalled $288,000 last year, said Nelson City Council chief executive Clare Hadley.
The company reached an agreement with the council to pay weekly instalments of $700, and the amount now owing is $265,000.
The company went into voluntary liquidation on Monday afternoon, closing the doors of its Hardy St music shop after 39 years.
Liquidator Geoff Falloon expects to make his first report on the company's financial position next week, and will hold a clearance sale at the shop, with proceeds going to creditors according to their ranking.
Hadley said the likelihood of the council recovering the money was unclear at this stage.
Other unsecured creditors include Off Broadway Performing Arts School, which has lost nearly $2000 in ticket sales for its musical Next to Normal, which opens tomorrow at the Suter Theatre.
The company also owes its suppliers and Inland Revenue.
Asked why the council had allowed Everyman to fail to pay for so long, Hadley said: "This was a naive arrangement where the ticketing agent was not required to pay until a later date. It had occurred a number of times previously.
"I think it would be fair to say that the arrangement for payment for tickets sold had not kept up with changes in technology, which would have allowed for reconciliation on a regular basis."
The council had not previously released information publicly on the issue because the repayment arrangement was in place, Hadley said. The repayments included interest charged.
It is understood that a complaint from a ratepayer was made to the Office of the Auditor-General about the outstanding money and the way the council was handling the matter. The office declined to investigate, instead referring the concerns to the Appointed Auditor as part of his annual audit work.
Hadley said the council had not referred the matter to any outside agency. All matters were now being dealt with by the liquidator.
Nelson Mayor Rachel Reese said: "The losses and failure to disclose by the previous council arise out of poor management practices and lack of opportunity for governance oversight. This is an inherited issue that is similar to the Maitai Walkway project and Saxton Oval drainage issues."
Reese said her role was involving a lot of cleanup work.
"Governance oversight has improved dramatically in this council. Committees have been formed, and my expectation of committee chairs is that they will have oversight of their committee activities.
"The chief executive is fully aware that management practices of this nature are not acceptable to the current council, and full disclosure is expected."
Last August the council introduced a new ticketing system for the arts festival that excluded Everyman, with tickets available online, at the council office and some venues.
Shaw's other company Migraine Distribution, which distributes CDs to Mitre 10 stores, has also gone into liquidation.
Shaw has been unable to be contacted by The Nelson Mail for comment. His Atawhai home is empty and for sale.
The Nelson Mail