A Queenstown property developer whose company owes creditors more than $7 million says recent liquidations have no bearing on his commercial and apartment development projects at Jacks Point.
Formcrete Construction ceased trading in February.
Liquidators Jared Booth and Tony Maginness, of Baker Tilly Staples Rodway Auckland, were told it was because of trading losses and cash-flow difficulties caused by cost overruns.
The company was incorporated in January 2014 and its shareholders were trustees of the Franklin Business Trust and property director Dean Franklin who was the sole director.
Mr Franklin’s developments in Queenstown’s commercial heart include Clubhouse Lane, Village Works Quarters, Village Works Lofts, Hotel Tewa and Lake Tewa Alpine Residences.
Formcrete Construction had been subject to an Inland Revenue High Court application for the company to be placed in liquidation, the liquidator’s first report said.
While the estimated deficiency to creditors was unknown, preferential creditors were listed at $2.449m (Inland Revenue GST and PAYE) and unsecured creditors at more than $5m.
Three other companies connected to Mr Franklin — Founder Corporate, Falconer Corporate and SR Corporate — were also placed in liquidation last month.
In a recent statement, Mr Franklin said the liquidations, some of which were initiated by Inland Revenue, “represent a deliberate decision to close the book on legacy matters that no longer reflect the direction my team and I are heading”.
“These were historic entities, no longer part of my core operations, and their liquidation has no impact whatsoever on the development projects currently under way in Queenstown, including those at Jacks Point.
“Every active project is managed through separate, solvent companies with secure funding and strong delivery frameworks in place.
“This step was taken to resolve long-standing tax issues and streamline the business structure, allowing us to sharpen our focus on what truly matters, delivering exceptional developments in a responsible, sustainable way.”
Another company owned by Mr Franklin, Webber Corporate, was placed in liquidation last September on the application of Italian Stone Ltd.
In their first report on that liquidation, Lynda Smart and Paul Vlasic, of Rodgers Reidy, said the company operated as a corporate trustee of related entity the Webber Trust.
The deed for the Webber Trust included a clause whereby the trustee (Webber Corporate) automatically ceased to be a trustee upon the appointment of liquidators and a replacement trustee was appointed in September.
As a corporate trustee, the company did not appear to hold a beneficial interest in any assets. However, it was entitled to be indemnified by the trust in respect of any costs incurred on behalf of the trust.
The liquidator’s six-month report said the trust was involved in the development of six residential units in Auckland. At the time of appointment of the liquidators, three had been sold and the trust continued to own the remaining three units.
The liquidators registered caveats against the three remaining titles.
Sales had been concluded on two with full funds from each sale required to satisfy the mortgagee’s first ranking security.
At the time of the report, the registered caveat remained on the remaining title which continued to be marketed for sale and also remained subject to the mortgagee’s first ranking security.
Last year, Mr Franklin suggested increased costs associated with Covid-19 were a “force majeure” event which justified hiking prices of pre-sold residential units, purporting to cancel contractors for those who refused to stump up.
The matter was taken to the High Court at Invercargill and, in his judgement, Associate Judge Owen Paulsen refused to lapse the caveats lodged by three purchasers, over the head title of FCL CL Ltd’s Clubhouse Lane development at Jacks Point. Mr Franklin is sole director and shareholder of FCL. — APL
