Yarrows' creditors may sue

JOHN ANTHONY
Last updated 05:00 10/07/2012
yarrows stand
FAIRFAX
There may be more life left in the ongoing wrangle over Yarrows the Baker.

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Creditors left out of pocket from the Yarrows Group fallout could mount a legal case, says an independent group investigating why the Manaia-based bakery business collapsed.

The New Zealand Legacy Foundation 2012 based its claim on its examination of financial accounts for the Yarrows Group, spokesman Myron Manuirirangi said.

It believed creditors could take a class action to bring a claim against a "directors and officers liability and company reimbursement" insurance policy held by Yarrows (The Bakers).

The foundation, established earlier this year, has a group of about 40 business people working to assist Paul Yarrow in his fight to regain control and ownership of the Yarrows Group.

A website set up by the group says an evaluation of published but unaudited financial statements of the various companies and entities in the Yarrows Group showed discrepancies from the non-consolidation of Southern Cross Investments Ltd and Yarrows Traditional Foods (1923) Ltd into the overall Yarrows Group accounts for 2004 to 2008.

Yarrows (The Bakers) included operations of the factory in Manaia and group finance and administration. It was placed in liquidation in December last year.

Yarrows Traditional Foods, now in receivership, is a holding company for about 90 per cent of the shares in Yarrows (The Bakers).

Southern Cross Investments Ltd is the parent company of the entity owning land, buildings and certain intellectual property of the Yarrows Group.

The New Zealand Legacy Foundation said a "best estimate" consolidation of the two entities could form a legal basis for Yarrows' creditors to regain lost money.

Creditors were being asked to register their interest through the website to form a class action against the directors and officers of Yarrows (The Bakers).

Once a class of creditors was established a team of lawyers would be elected to lead the effort.

Mr Manuirirangi said it had not been decided how this would be funded.

There was a good opportunity for creditors' losses to be reimbursed from the insurance policy, he said.

It was not known if the receivers BDO were aware of the policy.

Attempts by the Daily News to contact BDO receivers Brian Mayo-Smith and Andrew Bethell yesterday were unsuccessful.

Paul Yarrow told the Daily News the initiative to rally creditors was a step in the right direction.

"It's the first of many steps being taken to ensure all those that have supported us over the years are paid," Mr Yarrow said.

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"It's wonderful. It's very good for people."

If creditors did file a class action Mr Yarrow said he would end up in court.

"That's when the truth will come out," Mr Yarrow said.

The Yarrows Group includes 29 companies, of which Mr Yarrow is a director for 10. Only six of those are still operational.

He is not a director of Southern Cross Investments Ltd or Yarrows Traditional Foods (1923) Ltd.

- © Fairfax NZ News

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