Insolvency specialists separately managing skifield operations at Ruapehu joined forces to bat away legal argument from users that government interests are subservient to users rights at a time when taxpayers have provided over $17 million to keep the skifield open while a buyer is found.
A cascade of factors forced Ruapehu Alpine Lifts Ltd into a liquidation: heavy borrowing to fund construction of its $25 million Sky Waka gondola; covid pandemic travel restrictions and border closures keeping visitors off the mountain; and warmer weather meaning less snow. Ruapehu Alpine owns skifield assets on the central North Island mountain, which coupled with a Conservation licence allow it to run commercial operations in what is a national park.
Its 2023 liquidation saw insolvency specialists at PwC appointed liquidators.
Prior to liquidation, eight million dollars of taxpayer support kept Ruapehu Alpine trading. This was topped up with another tranche of five million dollars prior to the 2023 ski season; PwC needed to keep Ruapehu Alpine alive both to generate income from sales in the coming season and to maintain a viable business ready for sale.
In the background, financier ANZ Bank bit the bullet and exited what had been a catastrophic deal with Ruapehu Alpine. ANZ funded the Sky Waka project. By October 2023, ANZ was owed $16.1 million. It sold this debt and its rights as secured creditor to government-owned Crown Regional Holdings Ltd for a nominal one dollar plus a deferred entitlement to receive fifty per cent of any funds recovered by Crown, capped at $638,400. Exercising ANZ’s rights, Crown immediately appointed as receivers insolvency specialists at Calibre Partners.
This receivership annoyed some skifield users, complaining the appointment was invalid. Members of Ruapehu Alpine’s liquidation committee led the charge.
Company law allows creditors of an insolvent company to band together, appointed as a committee to oversee a liquidation.
Ruapehu’s five person liquidation committee represents groups interested in seeing Ruapehu Alpine revived, including Ruapehu Alpine staff and skifield life pass holders.
The committee had its eyes on some $2.4 million cash in hand generated from Sky Waka ticket sales. This money belonged to Ruapehu Alpine they claimed. The cash was available to pay liquidation committee members for ‘actual out-of-pocket expenses necessarily incurred,’ as permitted by the Companies Act, it said.
Both PwC and Calibre Partners faced the possibility these ‘out-of-pocket expenses’ would extend to legal action challenging Crown’s appointment of a receiver, and with it, disruption to any sale of Ruapehu Alpine’s assets. They jointly asked the High Court to rule on who was entitled to cash from Sky Waka ticket sales.
Justice Campbell ruled the money belonged to Crown Regional Holdings. It had purchased ANZ’s rights. These rights included a right to keep ‘after-acquired property’ relating to Sky Waka. All cash from ticket sales was after-acquired property.
Justice Campbell rejected an argument that any cash coming into the hands of a liquidator must be held for the benefit of unsecured creditors and can be accessed by a liquidation committee. While the liquidator did receive the cash, first claim on these ticket proceeds goes to any creditor who has security over gondola revenue. It is similar to the liquidator of a retail store holding a ‘liquidation sale,’ he said. In a retail context, the liquidator acts as agent for any creditor holding security over stock in store, getting in the cash before handing it over.
The High Court was told PwC and Calibre Partners had agreed between themselves a modus operandi, allowing the receivers to manage day-to-day operations of the skifield. This arrangement was supported by a further tranche of government funding: $4.3 million.
Gibson v. Platt – High Court (28.02.24)
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