Mainzeal was one of the largest construction companies in New Zealand when it was put into receivership in 2012, liquidation followed shortly afterwards. Fast-forward five years and the receivership stage process has just been completed with the Receivers retiring on 15 May 2017.
The completion of the Receivership means that the secured creditors (bank) and preferred creditors (IRD, employees) have been paid amounts owing and the remaining assets have been transferred to the liquidators. The liquidators’ job is to realise any remaining assets and distribute these amongst the unsecured creditors.
Liquidation – unsecured creditors
At the completion of the Receivership $6m was transferred to the liquidators. This may seem like a significant sum although when this amount is compared this against the $157m of unsecured creditor claims the distribution to unsecured creditors is not looking promising.
The liquidators have indicated that any distribution to unsecured creditors will largely be dependent on the success of court actions being brought against the previous directors of Mainzeal and their related companies and it will be interesting to follow these cases as they progress to trial (the liquidators have secured funding for these proceedings and they are currently in the discovery stage).
Retention trust regime
The Mainzeal liquidation is often cited as the catalyst for the retentions trust regime that requires all retention money on commercial construction projects to either be held on trust for the payee or to be secured by a complying instrument (insurance or bond). This requirement is now law and applies to all contracts entered into or renewed after 31 March 2017 (see previous blogs here and here).