No money for unsecured creditors

Article – BusinessDesk

Precision Foundry receivers say no money for unsecured creditors

By Victoria Young

July 23 (BusinessDesk) – The receivers of former Masport firm Precision Foundry say unsecured trade creditors and unsecured employees – who have claims of about $4.07 million – are unlikely to get anything.

The Auckland-based cast iron exporter that previously employed 80 staff was placed in receivership before Christmas last year. The company, directed by Paul Ayers and Myles Cooper, turned over about $15-18 million.

In a report dated July 22, KordaMentha receivers Grant Graham and Neale Jackson said it is now unlikely unsecured creditors will get any money once other priority creditors are paid.

The receiver’s report said that they’ve sold all of Precision Foundry’s plant, machinery and stock and collected $2.19 million that was owing to it.

Receivers have already started paying the ASB Bank, which was owed $1.75 million. The report said that while $1.15 million has been given to the bank so far, it will suffer a shortfall.

Precision Foundry’s parent, Challenge Partners, was owed $1.6 million, but has advised receivers that it would offset that debt against business assets it had bought from the company prior to the receivership.

Challenge Partners is a group of companies which includes a plastic manufacturer and printing company. It bought Precision Foundry in 2014.

At the date of receivership, company records showed $2.83 million owing to trade creditors, although receivers only received claims to the value of $1.4 million.

The total amount of priority claims from employees totalled $1.31 million, of which about $400,000 has been distributed.

There is a statutory limit of about $23,000 in salary and wages, unpaid holiday pay and redundancy that employees can claim as preferential and the claims must relate to the four months before the company goes under. The rest of their claim is unsecured and goes to the back of the queue.

There is a further $2.67 million claimed by employees which is unsecured, the report said.

The IRD has a preferential claim of about $160,000, as well as other debt.

Since they started, receivers have billed $400,000 for their work distributing the funds.

At the time of receivership, E Tu union said that its members had been “blindsided” by the closure and that some workers had been sent on leave for the Christmas break without being told about the receivership.

E Tu director of organising, Ahlene McKee, told BusinessDesk the union had been informed members had got about 30c in the dollar so far.

“Our members have been through a hard time emotionally and financially and we want to see some reparation. People should pay up.”

McKee said about 40 staff were unionised and, while she wasn’t sure how many had gotten jobs since Christmas, some were close to retirement or had specific skill sets making new employment difficult.

(BusinessDesk)

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