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Originally posted by nzherald
Doubts over deposits in housing firm's collapse
Tuesday December 5, 2006
By Wayne Thompson
At least 10 customers of an Orewa building company that went into liquidation early last month are wondering whether they will be compensated for their $25,000 deposits.
Meridian Homes had 33 contracts to build homes from Tauranga to Whangarei when it went into liquidation owing $2.2 million on November 3.
The first liquidator's report by Gerry Rea Associates says the company owned by Dean Hopper had 17 homes under construction. Eleven of those were uneconomic to complete and their contracts were abandoned.
Plans and documentation for these homes were available for owners to contract with builders of their choice to complete them.
Contracts for a further 16 customers who paid deposits for homes, which had not been started, were also abandoned.
Customers were referred to the Master Builders Federation, which runs the Master Build guarantee scheme.
Many of the people who paid deposits to the building company in advance of work being done paid a $723 fee for the guarantee to partially cover loss of deposit or building not being finished.
Deposit payers are ranked as unsecured creditors, said joint liquidator Paul Sargison.
Unsecured creditors were owed $2,371,864 and preferential creditors (the Inland Revenue Department and employees) $72,407.
Mr Sargison did not hold out strong prospects of any significant distribution being made to unsecured creditors.
A number of Master Build guarantee agreements were not sent to that organisation by the company.
The federation said it had received about 10 compensation claims for guarantees it had no record of accepting.
Federation chief executive Pieter Burghout said claims from the company's clients were in two groups.
"One is where all the paperwork was completed, sent to us, paid for and we have written back to the clients whenever, fully accepting the guarantee.
"Therefore, as soon as there is a problem we stand behind the guarantee."
About 20 had their claims accepted, he said.
"The second is a bunch where we never received any documentation and were unaware of there being a guarantee.
"For those, we will make that call at the end of the liquidation process."
Mr Burghout said the federation would attend the company's creditors meeting and learn the full financial position.
It wanted to know whether there were obligations on the part of company principals to "put money in the pot".
Aucklander Gail Francis was one of the company's clients waiting yesterday for a decision on her claim. For her $723 guarantee fee, she expected to get back $20,000 of the $25,000 deposit she paid last April.
Back then she thought work on her new home would be under way by now.
"I'm relying on that money, otherwise the dream of my house is over."
The guarantee covers loss of deposit of up to 10 per cent of the contract house price to a maximum of $20,000 or, for non-completion, up to 10 per cent of the contract price, limited to $40,000.
The deadline for creditors filing claims with the liquidators is tomorrow.
A creditors' meeting has been called for December 18.
* The liquidation does not affect franchisees using the Meridian Homes name.
Tuesday December 5, 2006
By Wayne Thompson
At least 10 customers of an Orewa building company that went into liquidation early last month are wondering whether they will be compensated for their $25,000 deposits.
Meridian Homes had 33 contracts to build homes from Tauranga to Whangarei when it went into liquidation owing $2.2 million on November 3.
The first liquidator's report by Gerry Rea Associates says the company owned by Dean Hopper had 17 homes under construction. Eleven of those were uneconomic to complete and their contracts were abandoned.
Plans and documentation for these homes were available for owners to contract with builders of their choice to complete them.
Contracts for a further 16 customers who paid deposits for homes, which had not been started, were also abandoned.
Customers were referred to the Master Builders Federation, which runs the Master Build guarantee scheme.
Many of the people who paid deposits to the building company in advance of work being done paid a $723 fee for the guarantee to partially cover loss of deposit or building not being finished.
Deposit payers are ranked as unsecured creditors, said joint liquidator Paul Sargison.
Unsecured creditors were owed $2,371,864 and preferential creditors (the Inland Revenue Department and employees) $72,407.
Mr Sargison did not hold out strong prospects of any significant distribution being made to unsecured creditors.
A number of Master Build guarantee agreements were not sent to that organisation by the company.
The federation said it had received about 10 compensation claims for guarantees it had no record of accepting.
Federation chief executive Pieter Burghout said claims from the company's clients were in two groups.
"One is where all the paperwork was completed, sent to us, paid for and we have written back to the clients whenever, fully accepting the guarantee.
"Therefore, as soon as there is a problem we stand behind the guarantee."
About 20 had their claims accepted, he said.
"The second is a bunch where we never received any documentation and were unaware of there being a guarantee.
"For those, we will make that call at the end of the liquidation process."
Mr Burghout said the federation would attend the company's creditors meeting and learn the full financial position.
It wanted to know whether there were obligations on the part of company principals to "put money in the pot".
Aucklander Gail Francis was one of the company's clients waiting yesterday for a decision on her claim. For her $723 guarantee fee, she expected to get back $20,000 of the $25,000 deposit she paid last April.
Back then she thought work on her new home would be under way by now.
"I'm relying on that money, otherwise the dream of my house is over."
The guarantee covers loss of deposit of up to 10 per cent of the contract house price to a maximum of $20,000 or, for non-completion, up to 10 per cent of the contract price, limited to $40,000.
The deadline for creditors filing claims with the liquidators is tomorrow.
A creditors' meeting has been called for December 18.
* The liquidation does not affect franchisees using the Meridian Homes name.
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