Attempts to bankrupt Mainzeal director Richard Yan are on hold while he appeals a High Court order to pay $18 million damages for his role in Mainzeal losses exceeding $110 million.
In 2019, liquidators of Mainzeal Property & Construction Ltd successfully sued the company’s directors for insolvent trading having found $26 million of Mainzeal’s funds were transferred offshore between 2004 and 2005 in purchase of assets in China, replaced by promises to repay which proved worthless. Directors collectively were ordered to pay damages totalling $36 million. Mr Yan individually, is liable for $18 million. All directors have appealed.
Liquidators took action to bankrupt Mr Yan. The High Court was told he has provided no meaningful offers of payment. Professional indemnity insurers for the other directors have provided security, to ensure payment of damages should their appeal fail.
Mr Yan said he cannot pay anything. He has no economic interest in Chinese companies controlled by him, he said. There are two properties in Auckland with a combined market value of some ten million dollars registered in his name. He holds these assets as trustee of family trusts, he said. One Auckland property is occupied by his spouse and their son, who attends school in Auckland. Mr Yan spends most of his time in China.
Associate Judge Andrew ruled Mr Yan’s Mainzeal appeal was not frivolous; there were concrete legal issues to be aired before the Court of Appeal. If bankrupted, Mr Yan’s rights of appeal would pass out of his hands; any decision to further his appeal would be at the discretion of Insolvency Service.
The High Court was told any bankruptcy order against Mr Yan made in New Zealand would not be recognised by China’s courts and would not be enforceable in China.
Mainzeal Property & Construction Ltd v. Yan – High Court (10.07.20)
20.120