Directors attempts to knock Mainzeal’s liquidator out of contention before legal action against them even got into court has failed.
In 2013, Mainzeal Property and Construction Ltd went into liquidation. To date, liquidators have accepted creditor claims totalling $117 million. Insolvency specialists at BDO were appointed liquidators. They are suing Mainzeal directors alleging reckless trading and breaches of directors’ duties during Mainzeal restructuring.
Before the case got to trial, directors applied to knock out evidence intended to be given by liquidator Andrew Bethell. He lacked independence, they said. Mainzeal liquidators have signed up to a liquidation funding agreement covering costs of legal action against directors. They are required to ‘use their reasonable endeavours to maximise settlement or judgment proceeds’. This does not prejudice the liquidators’ position, Justice Cooke ruled. Liquidators are under a general obligation in any event to maximise returns for Mainzeal creditors.
Directors also criticised the tone of Mr Bethell’s proposed evidence. He could give evidence of fact they said, but not offer opinion evidence about directors’ knowledge and the timing of insolvency. In complex commercial litigation, the dividing line between fact and opinion becomes less clear, Justice Cooke said. Mr Bethell, as an insolvency specialist, is qualified to give expert opinion evidence about matters within his area of expertise, Justice Cooke ruled.
Most of the heavy lifting in winding down Mainzeal’s construction activities was carried out by PwC appointed as receiver to recover funds advanced by secured creditor, Bank of New Zealand. Receiver’s final report dated May 2017 show that at the end of the receivership PwC handed over eight million dollars to BDO as liquidator.
Mainzeal Property and Construction Ltd v. Yan – High Court (20.9.18)
18.183