Du Val property group heads to court to fight decision to put it into receivership

RNZ News

2 days ago

Du Val director Kenyon Clarke.
Photo:
kenyonclarke.com
Some subbies still owed money in the Du Val collapse say their companies have barely survived and they doubt they will ever see a cent.
The Du Val property group is heading to court on Monday to try to fight the decision to put it into receivership and freeze the assets of founders Charlotte and Kenyon Clarke.
The
group of about 70 entities
and the Clarkes themselves were put into receivership by the Financial Markets Authority last year, with the companies eventually put into the more serious statutory management by the government in August. At last count
its debts were more than $300 million
.
Despite that, Kenyon Clarke maintained none of the current situation "was our making," suggesting it was Du Val that was the victim.
Deccan Property Services did painting, GIB stopping and fixing, and provided general labour at a Du Val development in Mount Wellington.
Its owner, Aniket Bapat, said the company was owed about $230,000 - a debt that nearly wiped his company out.
"We've... been just hanging by a thin strand of hair, not even thread," he said.
His was one of about 75 companies listed by statutory managers, PWC, as being owed money by Du Val Construction, otherwise known as Blue River Holdings, a residential building arm of the property group.
Many were family businesses.
Bapat said his company had to use profits from all their other jobs to pay their own staff and bills from the Du Val job, and they had to use a loan and overdraft to help, he said.
Most of the next year's profits had gone into paying off the loan and they were still struggling, he said.
"Even now if we don't see enough jobs coming, we are paranoid... we are literally just keeping the tip of our nose above water," he said.
As the company began to recover, it had put in more safeguards, and Bapat has had therapy to help with the mental health impact.
"It was bloody stressful," he said.
Like the other creditors, he will have to wait for the outcome of the statutory management process to see if he gets paid, but has had to move on.
Lisa Moroni owns Precision Cleaning Services and said she was owed about $80,000.
"It was very hard because... we are a small to medium business and we run pay cheque to pay cheque and that was a massive project for us," she said.
Most of the outstanding amount was from a big, final clean of one of the developments after construction was complete, she said.
"It's a lot of work done in two or three months and when you don't get paid it does affect the business a lot," she said.
They had to lay off staff and move out of their downtown office to cut costs," she said.
An owner of a large concrete cutting and drilling firm who did not want to be named said they were owed about $17,000.
Though it was not as big as some others' debts, it had still been stressful, she said.
She went to Du Val to try to get some money back to no avail.
"We drill a hole through a wall... so if we don't get paid there is nothing that we can go retrieve, like our consumables or materials," she said.
"We laugh that we should maybe go and fill the hole back up."
Bapat said he regretted giving Du Val the benefit of the doubt that money was coming - and had learned a hard lesson to be less trusting.
RNZ spoke to several more Du Val Construction creditors who did not want to be interviewed but expressed similar sentiments.
They said they did not expect to get any money back but they wanted more information from PWC about what was happening in the process.
A handful of other creditors said they had been paid in full and did not have a problem.
One felt if Du Val had been allowed to keep operating, it could have gone on to sell its developments and everyone would have been paid.
The Du Val founders remain defiant, suggesting it is the company and its investors who are the victims of heavy handedness by the Financial Markets Authority and the receivers.
In a lengthy statement to RNZ, Kenyon Clarke said prior to the FMA actions there were no financial concerns that were not capable of being managed and the group was on track to deliver a return to shareholders, investors and contractors.
"We can confidently say that none of this was of our making and was action taken without us being able to fight for those we have worked closely for and with," he said.
"It has been a horrible and frightening thing to witness, and we understand and feel for all those impacted."
It was telling that the FMA had not taken any further action in the 10 months since statutory management, he said.
Clarke also hits out at the PWC saying it lacked business acumen in the development sector and had made the group's financial position worse.
The company would seek compensation, he said.
At the time the government put Du Val into statutory management, it said it was an option of last resort used only where there was complex corporate failure.
It did so because of the complexity and scale, saying there were between 120 and 150 home buyers and commercial lenders "tangled up" in the situation, it said.
Du Val creditors spoken to by RNZ maintain there were sometimes months-long delays in getting paid in the lead up to the statutory management.
PWC and the FMA declined to comment on Clarke's statements.
PWC said creditors who wanted more information could find it on its website, or email the team.
"To most effectively and efficiently work with the large number of entities and stakeholders related to the Du Val Group, we prioritise providing updates when significant matters are resolved or analysis completed," a spokesperson said.
The legal action taking place on Monday is in the civil branch of the High Court in Auckland. There are no charges against Du Val or the Clarkes.
The Clarkes are challenging the Financial Market Authorities' decision to appoint receivers for both for them and Du Val last year, which culminated in the government putting Du Val into statutory management on the FMA's recommendation.
PWC has been both the statutory managers and the receivers for the Clarkes' personal financial situation since then.
Despite the legal challenge, the statutory management and receivership processes have been continuing.
At least part of the delay to allow the Clarkes to appoint a lawyer. They now have Ron Mansfield KC.
The Clarkes have also been given the right to appeal a High Court decision forcing them to be interviewed under oath by receivers, PWC.
PWC wants to interview the couple about the assets in their possession - including whether they were purchased by the Clarkes themselves or by Du Val companies.
So far the couple has refused and it will be up to the Court of Appeal to decide.
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