Contractors hit by Mainzeal collapse
Building industry players say significant sums are owed to subcontractors with the collapse of Mainzeal Property and Construction, although it's unclear at this stage exactly how much.
Mainzeal, the country's third largest construction firm, was put into receivership on Wednesday by its sole director, Richard Yan, due to several "adverse events" and the downturn in commercial construction.
Receiver PricewaterhouseCoopers was sifting through the details yesterday and said it did not know how much debt was involved.
Mainzeal's 400-odd staff would continue to be paid, but subcontractors would have to lodge a claim as unsecured creditors.
Commentators said Mainzeal's demise was ironic as the industry stood on the cusp of recovery.
"The work in Christchurch which could have helped Mainzeal hasn't really kicked in yet," said Pieter Burghout, chairman of the Construction Industry Council.
Neville Simpson, of Ecanz, the electricity contractors association, said he had contact with a dozen members so far who were owed big money and were unlikely to have insurance cover.
One Wellington electrical contractor was owed $800,000.
"It just highlights an issue . . . that this money's unprotected and yet it's been earned by the sub- contractor involved."
Burghout said no-one would know the extent of the fallout until Mainzeal's debt was revealed.
Asked whether the company was likely to be taken over in full, he said it was "certainly an option," but his own opinion was that it would be sold off in parts.
Christchurch's rebuild had not started yet, so he suspected Mainzeal's portfolio was fairly light and its contracts would probably be sold off by city or by region.
A Fletcher Building spokesman said his company would be willing to take over some project management work if asked.
Like others in the industry, he said Mainzeal's collapse was unexpected but the industry had been through tough times. Margins had been slim "for all of us".
Questions remained over why Mainzeal had collapsed, but some clues were provided by its three independent directors, Jenny Shipley, Paul Collins and Clive Tilby.
They resigned from Mainzeal's parent company on Tuesday after being asked to shift from the construction company's board in December.
In a statement, the three directors said Mainzeal had been battling leaky home liabilities, a payments dispute on a large contract, and supply chain problems.
A promise of equity from Mainzeal Group's shareholder Richina NZ - run by Yan and a Malaysian director - had become "uncertain and conditional".
Mainzeal was known to have several big leaky repair jobs including the roof of Vector arena and an apartment building in Auckland's Hobson St.
Burghout said the company had a reputation for heading off disputes by fixing the problem.
"They took the right strategy of jumping in fixing rather than litigating, but I suspect on the balance sheet they would have shown as contingent liabilities and that obviously got too much at some point."
Receiver Colin McCloy said he hoped to have an initial statement out on Mainzeal early next week.
He confirmed there were many Mainzeal subsidiaries and that the only two in receivership were Mainzeal Property and Mainzeal Living. Mainzeal Group, the parent, was not in receivership. Fairfax NZ
- © Fairfax NZ News
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