Lender pulls the plug

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Credit crunch catches apartment king

Queenstown’s apart­ment king has been caught in the credit crisis.

Ross Wensley has had to liquidate one of his subsidiaries after a lender on The Club development on Frankton Road got cold feet.

The Club company went into liquidation on November 11 and Auckland liquidator Lloyd Hayward issued his first report two days later.

“[The subsidiary] was particularly and adversely affected by the well-publicised effect of the credit crunch and its effects on property values,” Hayward says.

“[This] resulted in one of the company’s secured lender’s confidence diminishing to the extent that a restructure [of assets and debt was required].

“This restructure included the sale of all completed but unsold apartments at The Club resort to another entity associated with [Wensley Developments].”

Eight apartments were transferred to the other Wensley company after an independent valuation, Hayward tells Mountain Scene.

They have a book value of $8.6 million, says Hayward’s report, but “realisable value” is “unknown”.

Other than an unstated amount of prepaid company tax, the failed subsidiary’s only asset is a third-ranked loan to the new Wensley company – Hayward won’t reveal how much.

If sales on the eight apartments don’t cover first- and second-ranked loans, this third loan may not be repaid to the defunct subsidiary.

Who loses out? A Christchurch law firm and an Invercargill accounting practice are unsecured creditors – but Hayward says these debts are fairly small.

The big loser is Inland Revenue – owed $3.6m in GST and the thick end of another million in penalties and interest. The IRD could offset prepaid company tax against what’s owing, Hayward says.

With more than 300 units built, Wensley has been Queenstown’s biggest apart­ment developer by far – as well as The Club, his other complexes include Remark­ables Retreat, The Point, The Glebe, The Shore, The Beacon and the nearly-completed Marina.