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.”
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