Auburn Development Limited (In Liquidation) Liquidator’s First Report Filed on 3rd February 2020 LIQUIDATOR’S FIRST REPORT AUBURN DEVELOPMENT LIMITED (IN LIQUIDATION) PRELIMINARY STATEMENTS RESTRICTIONS and WAIVER The Liquidator does not accept any responsibility or liability for any damage or loss occasioned to any party because of this report and takes no responsibility for any misinformation contained herein that has been supplied by the Company, its officers or any other person. This report is based upon information available at the time the report was completed, and the Liquidator therefore reserves the right to review, and if considered necessary, to revise the report. DECLARATION OF INDEPENDENCE AND RELATIONSHIPS Please refer to Annexure One attached hereto for a declaration made about the nature of the relationship in existence prior to the commencement of the Liquidation. APPOINTMENT I, Bryan Edward Williams, an Insolvency Practitioner practicing at 131 Taupaki Road, Taupaki, Auckland, have been appointed Liquidator of Auburn Development Limited (In Liquidation) by an Order of the High Court of New Zealand dated 13th December 2019 and made at 10:06am. The date and time of the Order is the date and time of the commencement of the liquidation. This report is the Liquidator’s First Report. I advise that before the appointment to act as Liquidator I was appointed to be the Administrator of the Company. The appointment to act as Administrator took place on 28 July 2019. At the Watershed Meeting held on 8 October 2019, the creditors voted in support of a Deed of Company Arrangement and I was appointed Deed Administrator on 30 October 2019. This was the date that the Deed of Company Arrangement was executed. Auburn Development Limited (In Liquidation) Liquidator’s First Report Filed on 3rd February 2020 COMPANY DETAILS: The following details are extracted from the most recent documentation filed in the Companies Office or updated by events otherwise made known to me. Company Number Company Name Date of Incorporation Registered office Principal place of business Activity Shareholder Share capital on issue Director Registered Securities 5369981 Auburn Development Limited 7 July 2014 131 Taupaki Road, Taupaki, Auckland Auckland Property Developers David Oliphant 100 Shares David Oliphant There are 3 Financing Statements registered on the Personal Property and Securities Register BACKGROUND TO THE LIQUIDATION AND REALISATION OF PROPERTIES The Company was placed into liquidation by Order of the High Court on the motion of the Company. The Company elected to petition the Court for a Liquidation Order to ensure it was able to maximize the ‘claw back’ potential under the voidable transaction provisions in the Companies Act. This means that when looking into the history of the Company, time limited claims can be made using the filing date of the application rather than the date of the watershed meeting (had the Company been put into liquidation by creditor resolution at that meeting). At the Watershed Meeting the creditors voted in support of a Deed of Company Arrangement. With that mandate the document was prepared and executed on 30 October 2019. The express purpose of the Deed was to complete the selling activity of the properties owned by the Company. As at the date of this report all apartments have been sold. Four of those apartment sales are yet to settle. The settlement date for the last group of four is 31 January 2020. The net proceeds of sale are expected to be transferred to the liquidation fund during the first week of February 2020. Prior to settlement of the sale of the last eight apartments, including the four mentioned above, Kai Iwi Tavern Limited lodged a caveat on those eight titles. It claims to hold a general security interest over all the Company’s assets, which extends to a mortgage interest over those eight apartments. In order to release the caveat, to allow the properties to be transferred to the respective buyers, I provided an undertaking to hold the net proceeds of those last eight apartments separately, and not to disburse them until the claim by Kai Iwi Tavern Limited is resolved. I consider there to be a serious question to be resolved as to whether the December 2018 General Security Agreement, relied on by Kai Iwi Tavern Limited, should be set aside. Auburn Development Limited (In Liquidation) Liquidator’s First Report Filed on 3rd February 2020 STATEMENT OF RECEIPTS AND DISBURSEMENTS AND STATEMENT OF AFFAIRS Please refer to Table One for summary information of receipts and disbursements made since the commencement date of Administration. I have separated the analysis into two periods. The first column records the receipts and disbursements for the period of the Administration and the period of the Deed of Company Arrangement (“DoCA”) up to the commencement date of the Liquidation. The second column covers receipts and disbursements, again for the period of the Administration and DoCA, but which has taken place within the Liquidation. This period is 14 December 2020 through to 28 January 2020. A Statement of Affairs is provided as Table Two. In this document I have described the funds to hand and the claims made in respect of those funds. Each claim will need to be admitted before any distribution is made in respect of it. Once admitted, distribution will be made in accordance with the claimant’s priority until funds to hand are extinguished. The results of activities described in the section below (Proposal for Conducting the Liquidation) may result in additional value for distribution to claimants that are admitted into the Liquidation. PROPOSAL FOR CONDUCTING THE LIQUIDATION I have outlined below the activity that I propose to undertake during the Liquidation. 1. I will undertake an analysis of the trading activity of the Company for the period two years prior to the commencement date of the liquidation. As a part of this process I will seek to determine the time that the Company became insolvent and, as best as I can define it, the cause of that insolvency. 2. I will consider the claim made by Kai Iwi Tavern Limited as a secured creditor and seek to set that claim aside if appropriate. 3. I will also address the question of whether any payment to the earlier first-ranking secured creditor may be voidable under the Companies Act. 4. I will review the actions taken by the Director, or other persons that controlled the affairs of the Company, or performed services for it, and initiate appropriate proceedings, or file any reports, if appropriate in the circumstances. 5. I will pursue, to conclusion, the loan made to Mr Clode, recorded in the most recent financial accounts prepared by the Company as well as any other receivable that may be due to the Company. Interim reporting will be provided on a six-monthly basis or more frequently if relevant matters should be brought to the attention of the creditors. Once all matters are completed, I will prepare the Liquidator’s Final report and file it with the Registrar of Auburn Development Limited (In Liquidation) Liquidator’s First Report Filed on 3rd February 2020 Companies. A copy will be forwarded to all creditors that have filed a claim in the affairs of the Company. CREDITORS’ CLAIMS For creditors to be included in the affairs of the Company, an unsecured claim form is required to be completed and returned to the office of the Liquidator. Documentation for this purpose is provided with this report. Please complete and return the claim form as soon as possible. Creditors are required to make their claim, and to establish any priority their claim may have, by 28 February 2020. Please note that a claim in the Administration will not satisfy the need to file a claim in the liquidation – any creditor who filed a claim in the administration will need to file a new claim in the liquidation. Completed claim forms should be mailed to the following address: BWA Insolvency Limited P O Box 609 KUMEU 0841 Alternatively, the completed claim form can be emailed to gary@bwainsolvency.co.nz RETENTION OF TITLE CLAIMS OR SECURITY INTERESTS If you hold a valid retention of title claim, or a security interest over goods or equipment supplied to the Company, and you have not yet contacted the Office of the Liquidator, please do so immediately by email to bryan@bwainsolvency.co.nz Claims of this nature include holding a Purchase Money Security Interest (“PMSI”) taken in collateral to secure an obligation to pay all or part of the collateral’s purchase price. Detailed information of the security agreement, purporting to give the security interest, will be required. CREDITORS MEETING I advise that it is not my intention to call a meeting of the creditors because the issues relating to the Company have already been considered by creditors during the two meetings held within the Voluntary Administration program. However, the Companies Act 1993 reserves a right for any creditor to call a meeting, provided the creditor makes demand upon the Liquidator in writing, within 10 days of receipt of this notice. For further detail, please refer to Annexure Two provided with this report. Auburn Development Limited (In Liquidation) Liquidator’s First Report Filed on 3rd February 2020 LIQUIDATION COMMITTEE At any time during the liquidation, any creditor may, in writing, request the Liquidator to call a meeting of creditors to consider whether a Liquidation Committee should be appointed, and if so, to choose the members of the Committee. For more detail, please refer to Annexure Three provided with this report. ESTIMATED DATE OF COMPLETION OF THE LIQUIDATION At this stage it is not practical to estimate the date of completion of the liquidation. This will depend on the resolution of the issues identified in this report as well as the duration of any further investigative activity that may be required to be undertaken. Creditors are encouraged to contact the Liquidator on any matter relevant to the liquidation. Contact details are set out immediately below. By email to: By phone: By post: Physical address: bryan@bwainsolvency.co.nz +64 9 412 9762 BWA Insolvency Limited P O Box 609 KUMEU 0841 131 Taupaki Road Taupaki AUCKLAND For and on behalf of AUBURN DEVELOPMENT LIMITED (IN LIQUIDATION) Bryan E Williams LIQUIDATOR This report is filed on 3rd February 2020 Auburn Development Limited (In Liquidation) Liquidator’s First Report Filed on 3rd February 2020 TABLE ONE AUBURN DEVELOPMENT LIMITED (IN LIQUIDATION) STATEMENT OF RECEIPTS AND DISBURSEMENTS (GST EXCLUDED) FOR THE PERIOD OF THE ADMINISTRATION AND THE DEED OF COMPANY ARRANGEMENT FOR THE PERIOD 28 JULY 2019 to 28 JANUARY 2020 Total Admin. and DoCA Period From 28-Jul-19 14-Dec-19 To 13-Dec-19 28-Jan-20 1,508,290.18 1,029,195.65 -684,875.23 100,000.00 1,952,610.60 995,866.38 157,243.31 -375524.87 0.00 777,584.82 2,504,156.56 1,186,438.96 -1,060,400.10 100,000.00 102.39 102.39 0.00 0.00 102.39 10,097.30 11,350.50 2,507.00 14,469.15 38,423.95 0.00 0.00 0.00 0.00 0.00 10,097.30 11,350.50 2,507.00 14,469.15 15,642.92 343,952.84 22,803.95 231,658.59 251.73 1,567.10 615,877.13 2,854.88 37942.28 0 0.00 0.00 461.44 41,258.60 18,497.80 381,895.12 22,803.95 231,658.59 251.73 2,028.54 Source Realisations of Apartments ① Output GST collected Net GST paid Advance from Secured Creditor Overhead Costs Telephone costs Operating Costs Travelling Costs Valuation Costs Body Corp Costs Waste Management Administration Costs Accounting Fees Legal Fees Outwork service provider Administrator and Deed Administrator Fees Meeting Costs Public Notices 2,730,195.42 102.39 38,423.95 657,135.73 2,034,533.35 Funds on hand Further funds to receive (last four apartment sales) ② Net GST (Output less Input) 1,134,434.87 147,969.35 Total funds to be to hand on full realisation ① Net proceeds after payment of commission, conveyancing costs and repayment to PA View Opportunity VII Limited as first mortgagee. ② Net proceeds after payment of commission and conveyancing costs. 986,465.52 3,020,998.87 Auburn Development Limited (In Liquidation) Liquidator’s First Report Filed on 3rd February 2020 TABLE TWO AUBURN DEVELOPMENT LIMITED (IN LIQUIDATION) STATEMENT OF AFFAIRS (GST EXCLUDED) - TWO SCENARIOS DESCRIBED AS AT 28 JANUARY 2020 SCENARIO ONE - KAI TAVERN LIMITED CLAIM ADMITTED AS SECURED CREDITOR Funds expected to be at hand 3,020,998.87 Claim made by Kai Iwi Tavern Limited 9,466,127.23 Shortfall Claims to be made by Preferential Creditors Costs and fees of the Liquidation (to be determined) Inland Revenue for unpaid GST -6,445,128.36 0.00 6,351,909.72 6,351,909.72 Increased shortfall -12,797,038.08 Claims to be made by Unsecured Creditors 3,173,668.87 Increased shortfall -15,970,706.95 Shareholder capital invested 100.00 Final shortfall -15,970,806.95 SCENARIO TWO - KAI TAVERN LIMITED CLAIM ADMITTED AS UNSECURED CREDITOR Funds to hand 3,020,998.87 Claims to be made by Preferential Creditors Costs and fees of the Liquidation (to be determined) Inland Revenue for unpaid GST 0.00 6,351,909.72 6,351,909.72 Shortfall Claims to be made by unsecured creditors Third party unsecured creditors Related party (Kai Iwi Tavern Limited) -3,330,910.85 3,173,668.87 9,466,127.23 12,639,796.10 Increased shortfall Shareholder capital invested -15,970,706.95 100.00 Final shortfall -15,970,806.95 Please note: The Liquidator is entitled to charge reasonable remuneration for carrying out the duties and exercising powers as the Liquidator. Any net funds available, as shown above, are subject to this entitlement. Auburn Development Limited (In Liquidation) Liquidator’s First Report Filed on 3rd February 2020 AUBURN DEVELOPMENT LIMITED (IN LIQUIDATION) CREDITOR DETAIL Alexander Dorrington Lawyers Armourguard Security ANZ Blackwater Consulting CMP Construction Contact Energy Cuesko Limited Envivo Limited Foley Hughes GHD Limited Gulf View Real Estate Inland Revenue Department Kai Iwi Taverns Limited Kingstons Project Management Lautrec Façade Design Ltd Lautrec Technology Group Limited Mark Tatton Architecture Ltd Natural Habitats Opteon New Zealand Limited Prestige Realty Renaissance Property Consulting Group Robin Morrison Roger Watson Spark Business Unlimited Potential Real Estate Wei Dong as Trustee for Olivia Trading Zen Property P O Box 7246, Wellesley Street, Auckland P O Box 1184, Ellerslie, Auckland P O Box 407, Wellington 11 Lisburn Avenue, Glendowie, Auckland P O Box 90895, Victoria Street, West Auckland Level 2, 29 Brandon Street, Wellington P O Box 301018, Albany Auckland P O Box 109207, Newmarket, Auckland P O Box 6829, Wellesley Street, Auckland P O Box 6543, Wellesley Street, Auckland P O Box 33-1477, Takapuna, Auckland 12-22 Hawkestone Street,Thorndon,Wellington 24 Glen Atkinson Street, St Heliers, Auckland P O Box 1947, Shortland Street, Auckland P O Box 303523, North Harbour, Auckland P O Box 303523, North Harbour, Auckland 41 Black Barn Lane, Bethlehem, Tauranga P O Box 11832, Ellerslie, Auckland P O Box 33-136, Auckland P O Box 31844, Milford, Auckland 280 Great South Road, Greenlane, Auckland 70 Onslow Avenue, Epsom, Auckland 10B Ngaio Street, Takapuna, Auckland P O Box 1473, Christchurch P O Box 28848, Remuera, Auckland Room 1002, Building 7, Lily Garden, Ningbo, China 250 Ridge Road, RD3 Albany, Auckland Auburn Development Limited (In Liquidation) Liquidator’s First Report Filed on 3rd February 2020 ANNEXURE ONE DECLARATION ABOUT INDEPENDENCE AUBURN DEVELOPMENT LIMITED (IN LIQUIDATION) 1. I, Bryan Edward Williams, say that; a. I have undertaken a proper assessment of risks to Independence in accordance with the law, code and applicable professional standards. b. I have determined that the assessment identified no real or potential risks to independence. c. I have disclosed any relevant statements to creditors of the Company as a pre-emptive requirement of the Administration and the Liquidation. d. As the person nominated to be the Liquidator by appointment of the High Court, I have not withheld any matter relevant to my nomination or the process of appointment. e. The High Court has appointed me as the Liquidator. This declaration is made on 3rd February 2020 Bryan Edward Williams LIQUIDATOR Auburn Development Limited (In Liquidation) Liquidator’s First Report Filed on 3rd February 2020 ANNEXURE TWO AUBURN DEVELOPMENT LIMITED (IN LIQUIDATION) COMPANY NUMBER: 5369981 Notice of Liquidator’s Decision to Dispense with Meeting of Creditors Pursuant to Section 245 of the Companies Act 1993 1. The Liquidator considers that, having regard to the assets and liabilities of the Company, the likely result of the liquidation of the Company and other relevant matters, a meeting of creditors under section 243 of the Act should not be held. 2. Should a creditor require a meeting to be called for resolving whether to confirm the appointment of the Liquidator and/or to appoint a Liquidation Committee, then written notice to the Liquidator is required within 10 working days of receipt of this notice. 3. Pursuant to section 314 of the Companies Act 1993, any creditor or shareholder of the Company can request in writing that the Liquidator calls a meeting of creditors or shareholders to: a. Vote on a proposal that a Liquidation Committee be appointed to act with the Liquidators: and b. Choose the members of any such Liquidation Committee. This notice is provided on 3rd February 2020 Bryan Edward Williams LIQUIDATOR Auburn Development Limited (In Liquidation) Liquidator’s First Report Filed on 3rd February 2020 ANNEXURE THREE The Companies Act 1993 Notice of The Right to Require Liquidator To Call Meeting of Creditors or Shareholders Sections 255 (2) (c)(ii)(b) and 314 Company Name: Auburn Development Limited (In Liquidation) Notice: 1. 2. At any time during the liquidation, any creditor or shareholder of the Company may request the Liquidator in writing to call a meeting of creditors or shareholders of the Company: (a) To vote on a proposal that a liquidation committee be appointed to act with the Liquidator; and (b) If it is so decided, to choose the members of the committee. The Liquidator may decline the request on any of the following grounds: (a) The request is frivolous or vexatious; or (b) The request is not made in good faith; or (c) The costs of calling a meeting would be out of all proportion to the value of the Company’s assets, and the creditor does not agree to meet those costs, but otherwise the Liquidator must comply with the request. This notice is provided on 3rd February 2020 Bryan Edward Williams LIQUIDATOR