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Palmerston North RSA in debt to tune of $2m
The full extent of Palmerston North RSA's troubles have been revealed, with receivers saying the crippled club is in a financial hole more than $2 million deep.
Despite facing a mountain of debt, the club's president says he believes everyone owed money following its collapse late last year will be paid.
The RSA asked its bank, ANZ, to place the club into receivership in December to avoid trading while insolvent, and the first receivers report was released yesterday.
It has so far been discovered that the Palmerston North RSA owes at least $2.15 million to creditors.
Debts to ANZ make up $1.49m of that, mainly in the form of a bank loan.
Inland Revenue is owed $234,526 in unpaid taxes, while $20,384 in holiday pay is still owed to staff.
Unsecured creditors are owed $385,775.
DB Breweries was owed money when the receivership started, but the report said the country's largest brewing company had since been paid. However, competing brewery Lion was $15,000 out of pocket.
The Mill Liquorsave was believed to be owed money, but the receivers' report said the amount was yet to be confirmed.
The RSA has $132,825 in equipment, which could be sold to pay debts, but receivers were yet to have the land and buildings at the club's Broadway Ave base valued.
According to Palmerston North City Council records, the location has a capital value of $3.275m.
The report said the receivership was still a work in progress.
"At this stage it is too early to assess the full outcome and impact of the receivership on the claims of the unsecured creditors," it said.
Palmerston North RSA president George Mathew said he had not yet seen the receivers' report, but the amount of money owed was about what he expected.
Despite the hard work of the executive to get the club back to breaking even, the situation became too big to handle, Mathew said.
"There was too much damage that had been done."
That damage was the result of bad business decisions by previous management of the club, Mathew said.
However, he said he could not name specific people as he had been threatened with defamation proceedings.
Former chief executive Lindsay McKinney, who resigned in 2011, said it was impossible to pin the blame on one person.
"This whole thing goes back . . . a long way, to when some crazy decisions were made."
However, all decisions were made by the executive and executed by management, McKinney said.
"The management is responsible to the executive; the management made things happen.
"Everything spent during [my time there] was undertaken under due diligence and brought to the board so they could make decisions on that basis.
"I wasn't in a position to spend anything [without permission]."
Former RSA president Gary Griggs could not be reached for comment.
Mathew said if the building and land sold for anything near the capital value, all debts would be able to be paid.
But that was not a guarantee, he said.
"It only takes one vulture to make an offer. The bank may not like the price but may take it anyway."
- © Fairfax NZ News