Bella Vista Homes Limited (In Liquidation) (“the Company”) Liquidators’ Further Report Company Number 5379301 Introduction Rhys Cain of Christchurch and Rees Logan of Auckland (“the Liquidators)” were appointed joint and several Liquidators of Bella Vista Homes Limited (In Liquidation) at 10:20 am on 18 January 2018 in the place of Thomas Rodewald and Kim Thompson (“the Former Liquidators”), who resigned as Liquidators of the Company on the same day pursuant to section 283(2) of the Companies Act 1993 (“the Act”) and appointed the Liquidators in their place. The liquidation originally commenced at 10:26 am on 30 November 2017. The Former Liquidators resigned following a request by two creditors to replace the Former Liquidators. Given the quantum of total Company debt these two creditors held, the Former Liquidators considered it appropriate to resign and appointed the Liquidators in their place. Both Rhys Cain and Rees Logan are RITANZ Insolvency Practitioners accredited by Chartered Accountants Australia and New Zealand. This report covers the six month period from 30 November 2017 to 31 May 2018 and should be read in conjunction with all other Liquidators’ reports issued on the Company. Restrictions The report has been prepared by us in accordance with and for the purpose of section 255 of the Act. It is prepared for the sole purpose of reporting on the state of affairs with respect to the Company in liquidation and the conduct of the liquidation. This report is subject to the restrictions set out at Appendix A. In particular, in preparing this report we have relied upon and not independently verified or audited information or explanations provided to us. Attachments Please find attached the following documents:  Appendix A – Restrictions to the report  Appendix B – Realisations and distributions A member firm of Ernst & Young Global Limited Background Prior to the commencement of the Liquidation the Company was undertaking a residential property development in Tauranga. Danny Cancian (“the Director”) advised the Former Liquidators that the reason for the failure of the Company was due to delays caused by Regulatory Authorities in the completion of contracts along with lack of profitability. Conduct of the liquidation for the reporting period Whilst we make no comment regarding the actions of the Former Liquidators, they have advised us that they undertook the following tasks between the date of their appointment and the date of their resignation (18 January 2018):  Met with key personnel for the Company, including the director  Engaged an independent building consultant to review the Company’s building contracts. All homeowners’ building contracts with the Company were disclaimed on 5 December 2017  Pursued the recovery of external debtors. As at the date of appointment the Company’s external debtor balance per the books and records of the Company totaled $75,527.95, consisting of progress payments due from homeowners. These amounts were disputed by homeowners and were subsequently considered not recoverable  Recovered funds on hand, funds held in trust and refundable fees  Sold a vehicle belonging to the Company  Liaised with creditors in submitting claims in the liquidation  All funds realised, after meeting their costs of the Liquidation, were taken as fees by the Former Liquidators prior to them resigning. For the period of the report since our appointment, the current Liquidators have undertaken the following tasks:  Commenced our investigation into the Company’s affairs  Corresponded and met with one of the Company’s Former Liquidators, had a handover meeting and obtained various Company records and information in their possession  Corresponded and met with the Company’s Director, accountants and solicitors to discuss the Company’s affairs  Attended various meetings in Tauranga to meet with homeowners who have purchased homes from the Company. The Liquidators have also provided relevant Company records to the homeowners relating to the build of their property. These records were originally supplied to the Former Liquidators, who handed over the uncollected records on our appointment.  Obtained access to the Company’s accounting system and financial records and carried out a review of this information A member firm of Ernst & Young Global Limited  Provided relevant information to the Honourable Paul Heath QC who completed an investigation and review into the Tauranga City Council’s involvement with 21 properties in the Bell Vista Subdivision  Our investigations to date have identified the following areas in which our recovery efforts are focused on: ► amounts owed to the Company by the Director; ► a number of transactions that occurred with related companies prior to liquidation that have reduced the amounts owed by these companies; and ► payment for the acquisition of the shareholding of a former director/shareholder, Daniel De Martin (“the Former Director”) by the Director. This transaction appears to have resulted in cash and assets being transferred out of the Company to the Director and used to pay for his acquisition of the shareholding from the Former Director.  Engaged legal counsel, to advise on and assist on these recovery actions identified  In relation to amounts owed by the Director we have issued a letter of demand regarding the Director’s overdrawn shareholder current account and continue to pursue recovery of this  In relation to the related companies there are a number of companies of which the Director is also a Director and Shareholder that provided services to the Company. Shortly prior to liquidation a number of transactions were recorded in the Company’s accounting system that had the effect of eliminating balances owed by these related companies at a time the Company was insolvent. We issued a formal information request pursuant to section 261 of the Act in relation to some of the transactions and are currently awaiting legal advice before determining our next steps in relation to these related company transactions  In relation to the transactions surrounding the transfer of shareholding between the Director and Former Director we have put the Former Director on notice of a legal claim and are pursuing this matter with the assistance of our legal counsel  Our investigation into the Director and Former Director’s (for the period he was appointed) compliance with their duties and obligations under the Act remains ongoing.  As the Liquidators do not currently have any funding available, we have met with major creditors to discuss options regarding funding to pursue the recovery actions identified  Corresponded with Inland Revenue Department regarding the tax position of the Company  Carried out incidental administration in connection with the liquidation  Attended to statutory reporting requirements Proposals for completing the liquidation Prior to completing the liquidation, we will continue to attend to the following matters:  Continue our investigations into the books, records and affairs of the Company. If any further recovery actions are identified, take the appropriate actions where it has potential to increase the recovery available to creditors  Continue pursuit of the key recovery actions identified including: ► Pursuing recovery of the Director’s overdrawn current account A member firm of Ernst & Young Global Limited ► Pursuing recovery of amounts from related parties in relation to balances eliminated prior to liquidation ► Pursuing recovery in relation to the transactions surrounding the transfer of shareholding from the Former Director to the Director  Report any breaches of legislation to the relevant authorities (as identified)  Establish the position of all classes of creditors, review and agree creditor claims and if funds allow undertake a distribution to creditors in accordance with the priority of valid security holders and the priorities set out in the Seventh Schedule of the Act Statement of realisations and distributions We attach a summary of the cash realisations and distributions for the reporting period as Appendix B. Creditor claims To date we have received the following claims: Creditor Type Amount ($) Preferential Claims IRD 679,877 Unsecured Creditors 3,456,832 Total Creditors’ Claims 4,136,709 Note: 1. These amounts are based on claims received. It is possible that creditors may not have submitted claims in the liquidation at this stage so it is possible this number may increase materially. 2. We note that 31 January 2018 was fixed by the Former Liquidators as the day by which the creditors of the Company were to make their claims and to establish any priority under section 312 of the Act, or to be excluded from the benefit of any distribution made before their claims are made or, as the case may be, from objecting to any distribution. Estimated completion date of liquidation and payout It is not practicable at this stage to provide an estimated date for the completion of the liquidation or an estimated payout to unsecured creditors. Should you have any information that you believe would lead to realisations for the benefit of creditors, please set it out in writing, attaching copies of all documentary evidence, and send it to the Liquidators. Please note that the Liquidators can only act on written information as telephone or other conversations will be regarded as hearsay by any court. Creditor funding Pursuant to the Seventh Schedule of the Act (which determines creditors priorities in a liquidation) any creditor who protects, preserves the value of, or recovers assets of the Company for the benefit of the Company’s creditors by the payment of money or the giving of an indemnity advances their claim to be a priority claim as stated in clause 1(1)(e). A member firm of Ernst & Young Global Limited The priority is for: ► ► the amount received by the liquidators by the realisation of those assets, up to the value of that creditor’s unsecured debt; and the amount of the costs incurred by that creditor in protecting, preserving the value of, or recovering those assets. Accordingly, if any actions for recovery are identified against parties involved with the Company that require funding for the Liquidators to undertake we will approach creditors who may be interested in this. If you are potentially interested in providing creditor funding should the circumstance arise please advise the Liquidators so we can contact you regarding this in due course. Liquidators’ fees We note that section 284(1)(e) of the Act sets out the right of creditor, shareholder, other entitled person or director of the Company in relation to reviewing or fixing the remuneration of the Liquidators at a level which is reasonable in the circumstances. The rates charged by the Liquidators and their staff are the same rates the Liquidators charge for Court appointment liquidations where the Court approves the hourly rates charged by the Liquidators and their staff. The current Liquidators make no comment on the fees charged and taken by the Former Liquidators. The Liquidators welcome creditor feedback regarding Liquidators’ fees, at any time during the liquidation. Reporting Reports on the conduct of the liquidation and on proposals for completion of the liquidation will be prepared and distributed six monthly in accordance with section 255 of the Act. A final report will also be prepared and distributed in accordance with section 257 of the Act at the completion of the liquidation. Contact details The Liquidators can be contacted at Ernst & Young, Level 4, 93 Cambridge Terrace, Christchurch Central, Christchurch (PO Box 2091, Christchurch). Enquiries should be directed to restructuring@nz.ey.com or 0800 737 878 / 0800 RESTRUCTURING during normal business hours. If you have not already done so, please complete a creditor claim form as soon as possible. Dated: 27 June 2018 Rhys Cain Liquidator A member firm of Ernst & Young Global Limited Rees Logan Liquidator Appendix A Restrictions This report has been prepared by us in accordance with and for the purpose of section 255 of the Act. It is prepared for the sole purpose of reporting on the state of affairs with respect to the Company in liquidation and the conduct of the liquidations. The information required to complete this report was provided by the shareholder(s), director(s) stakeholder(s) and/or employee(s) of the Company and/or from the Company’s records. Our duties, while involving an assessment of information provided and commenting as necessary, do not extend to verifying the accuracy and completeness of the information. We have not audited the information provided by the Company, their officer(s), or any other person(s), nor have we been required to do so. The joint and several Liquidators reserve the right, but are under no obligation, to review all calculations and commentary included or referred to in this report and, if we consider it necessary, to revise our report in light of any information, inaccuracies, or alterations to the information provided by the Company, its officer(s) or any other person(s) relevant to this report, which was in existence on the date of this report and becomes known to us after the date of this report. We do not accept any liability whatsoever to any party from any use of, or reliance on, this report. In addition certain numbers included in tables throughout this report have been rounded and therefore do not add exactly. A member firm of Ernst & Young Global Limited Appendix B Realisations and distributions for the reporting period For the period 30 November 2017 to 31 May 2018 Former Liquidators For the period 30 November 2017 to 17 January 2018 Liquidators For the period 18 January 2018 to 31 May 2018 Total for the period 30 November 2017 to 31 May 2018 Realisations Cash on hand at liquidation Sale of vehicle TCC refunded inspection fees Funds held on Trust by Lawyers GST on income 34,415.44 1,304.35 960.96 695.60 339.79 29.31 - 34,415.44 1,304.35 960.96 724.91 Total realisations 37,716.14 29.31 Distributions Former Liquidators’ fees Forensic accounting fees GST on expenses Former Liquidators’ disbursements Legal fees Bank fees 21,884.20 7,250.00 4,919.50 2,952.64 709.80 - 1.28 Total distributions 37,716.14 1.28 Closing cash at bank A member firm of Ernst & Young Global Limited 339.79 37,745.45 21,884.20 7,250.00 4,919.50 2,952.64 709.80 1.28 37,717.42 28.03