Employees of Kitchen Things and SolarZero have received their full preferential entitlement, the liquidator and receiver for both organisations says.
But he said customers of Kitchen Things in particular are likely to lose out.
SolarZero was put into liquidation by its directors late last year, while Kitchen Things was put into receivership last month.
Receiver and liquidator Stephen Keen from Grant Thornton New Zealand said the Kitchen Things staff received their maximum entitlement on Thursday and SolarZero employees followed on Friday.
The maximum is $31,820 per employee before tax and other deductions.
Employees rank ahead of many other creditors when a company is being wound up.
“We’re really pleased with this result,” Keen said.
“Being able to provide the full entitlement to employees isn’t always possible as it depends on the level of recovery appointees can make during the liquidation or receivership process.
“In both cases, the recoveries made so far have meant we can pay employees the full amount of their respective entitlements under schedule 7 of the Act”.
He acknowledged that SolarZero staff had faced a longer wait.
“Some appointments are more complex than others. The recoveries needed to fund the distributions to employees can take months to work through. In the case of SolarZero, this involved complex tax recoveries and a slower sale of solar panels to avoid flooding the market and reducing their retail value.”
Many customers, however, have been frustrated to find themselves as unsecured creditors with no stock allocated to their orders.
Keen said he could understand their concerns but when a retail business failed, receivers faced “tough challenges” around who was entitled to the stock.
“The tracing requirements of specific items to customer sales orders is complex and time consuming, often resulting in issues where the tracing cannot be completed because the product is not held by the Company, which means the customer is the one to lose out,” Keen said.
“Under the Companies Act 1993, employees of insolvent businesses are to be prioritised ahead of unsecured creditors; now that we’ve achieved this milestone for Kitchen Things’ employees, our goal is to ensure the best outcome for all stakeholders through the sale of stock and assets.”
