Owners of Queenstown’s Heritage Villas want to block bankrupt developer Rod Nielsen from profiting after leaving them in the lurch.
Leading the charge is local realtor and villa owner Duncan Brown, who’s roped in owners of 12 of the 36 villas and believes another 10 owners will also come aboard.
The group wants to stymie the imminent sale of the villa management contract by one of Nielsen’s few surviving companies, Little Rock Management.
“We find it immoral that Nielsen continues to enjoy income from Little Rock,” Brown says.
Owners are bitter Nielsen left them exposed by not completing major landscaping required by his resource consent.
Nielsen, 42, had tacked a $559,000 landscaping bond on to his Bridgecorp development loan – but the finance company went to the wall and Nielsen’s development company followed, so Queenstown Lakes District Council is now going individual villa owners for about $300,000.
Tenders for Little Rock’s management contract close tomorrow and Mountain Scene has sighted an accountant’s statement showing average annual income of $85,000, obtained by Little Rock raking in 12.5 per cent of rental income from the luxury units.
Sources say the contract could sell for anywhere between $250,000-$800,000.
Despite being bankrupt, Nielsen can legally retain 50 per cent of Little Rock because his shares were set up in a trust when the company was formed.
After going broke last September – for almost $17 million – Nielsen had to resign as Little Rock’s director but his wife Sirene Millar took his place the same day.
Brown’s lawyer has written to Little Rock, the Heritage Hotel – which actually manages the adjoining villas for Little Rock – and Harcourts, who are handling the tender.
It’s alleged Little Rock has breached its contract with owners by not providing audited accounts, and the breach entitles owners to terminate the management agreement – which would give Little Rock nothing to sell.
The lawyer specifically warns Harcourts that real estate regulations require “prospective purchasers of the management rights [to] be advised of this cloud hanging over Little Rock”.
Brown finds it “outrageous” Nielsen may benefit from the sale of the management agreement “while having no intention of honouring his obligations as developer”.
Another villa owner in Brown’s group, Australian Ralph Rogers, says he believes Nielsen “has done more to damage Queenstown’s reputation with overseas investors” than anyone else.
Harcourts boss Kelvin Collins is at a conference in Auckland and says he can’t comment without having all the details at hand.