The Official Assignee wants creditors of a defunct Queenstown development company to contribute towards $5000 needed to pursue $818,000.
The OA is liquidating SMG Properties, which developed the swanky Rees hotel on Frankton Road. SMG went phut in January 2011 owing $53 million.
Almost 60 unsecured creditors – including at least 20 from the Wakatipu – are whistling for $1.7m.
In a letter to creditors this month, the OA’s Keaton Pronk claims there’s a fighting chance of clawing back $818,000 from another company linked to Rees frontman Lindsay Singleton.
Creditors keen to chip in
If Mountain Scene soundings are representative, creditors are likely to stump up towards the first $5000 to chase $818,000 from another Lindsay Singleton company.
Three creditors approached by Mountain Scene say they’ll cough up contributions to the Official Assignee’s fighting fund.
Plumber-drainlayer Grant Railton is out of pocket about $8000 to SMG Properties: “I wouldn’t have any problem [contributing] to the kitty if everybody else is doing it.”
RHE Mechanical owner Warwick Stalker is owed $27,000 – he’ll “take a punt” with the liquidator, encouraging other firms to do likewise.
“I was unaware this situation existed and I’d hope other creditors back this position because if there are funds available we’re due to be paid for work carried out,” Stalker says.
Local Gasco boss Rob Peters will check with his boss in Christchurch but “for that sort of money, I don’t see a problem with it”.
As first revealed by Mountain Scene in March, Singleton owns and co-directs Wagil Ltd.
For starters, Pronk tells creditors, Wagil owes SMG $463,000.
“Additionally, there’s a further $355,485 previously owed by Wagil that was offset against payments to related companies,” he writes.
“The liquidator considers these to be insolvent transactions. This indicates that Wagil owes SMG Properties the sum of $818,401,” Pronk concludes.
An insolvent transaction is a payment made when a firm cannot generally pay its debts and when the payment disadvantages other creditors.
Wagil directors dispute the debt however, Pronk says.
A creditor whip-round is the only chance of pursuing the $818,000, he says – SMG’s cupboard is completely bare.
Pronk’s lawyers advise “good prospects of success in recovery proceedings”, he tells creditors.
However, the initial $5000 – under $100 per creditor if all 60 chip in–would only cover a preliminary legal opinion. Additional creditor funds may be needed for recovery proceedings.
Against that, Pronk says, if any money is clawed back from Singleton’s Wagil company, creditors who have contributed to the fighting fund will get priority payouts ahead of other creditors who haven’t coughed up.
Singleton, speaking from Auckland, says he disputes Wagil owes any funds to SMG.
“There’s no debt so far as we’re concerned and we’ve disclosed the full amount of what’s properly there.
“We did everything we could to try and sort it out,” Singleton says.
“I think 24 of our purchasers – and I’m talking several tens of millions – defaulted on settlement and we’ve taken action against every one to get the best outcome we can and succeeded against every one of them.
“But of course the purchasers haven’t been able to fund [this] and therefore those arrangements have been
cancelled and we’ve had to on-sell those at significantly less prices ... that’s where the losses sit.”
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