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The liquidators of Mainzeal recently launched a cross appeal that may result in other directors - including former Prime Minister Dame Jenny Shipley - having to pay double the compensation, sparking a warning to NZ company directors on the dangers of debt liability.
Mainzeal went into liquidation in early 2013, owing unsecured around NZ$110 million to tradespeople, sub-contractors and employees. In February of this year, however, Justice Francis Cooke ruled four former directors of Mainzeal should pay $36 million - one third of the total owed - after it was found the company had traded recklessly, according to reports.
The former directors responded by lodging an appeal against the decision, which was then countered by a cross appeal by liquidators Andrew Bethell and Brian Mayo-Smith. The liquidators appealed that they believe the former directors are liable for two thirds - around $73 million - instead of initial figure.
"The High Court found that the former directors exposed the creditors to illegitimate risk by using creditors' money to continue trading while insolvent for a number of years," Bethell said.
"The directors' breach of duty caused a total loss of $110m to the creditors. However, the High Court applied a discount of two-thirds to the starting point for contribution.”
To ensure peace of mind in the liquidation process, discuss your obligations and the potential issues that may arise with the experts. Liquidation Management exclusively handle liquidations throughout New Zealand, and their experienced team will assist you in creating a strategy for voluntary liquidation, providing clear action points to discuss with company directors before making a commitment.
Visit www.liquidationmanagement.co.nz today to learn more about liquidation management and organise a no-cost initial consultation, or call the team at Liquidation Management on 0800 547 767 (0800 LIQ SOS) for free, no-obligation advice.