Sika Homes Limited (In Liquidation) (“the Company”) Liquidators’ First Report to Creditors and Shareholders 25th June 2020 Disclaimer This report is prepared in accordance with section 255 of the Companies Act 1993 and is intended only for the Company’s creditors and shareholders for the purposes of reporting on the Company’s statement of affairs and the conduct of the liquidation. This report is based upon information available to the Liquidator as at the date of the report. We take no responsibility for any misinformation contained in the report that has been obtained from the Company, its officers or any other persons. This report is not to be reproduced, circulated or used for any other purpose without the Liquidators prior consent and the Liquidators, their firm and its employees accept no responsibility or liability to any party for loss or damaged caused from any use of or reliance on this report. Appointment Steven Khov and Kieran Jones both CA ANZ Accredited Insolvency Practitioners were appointed as joint and several Liquidators of the above-named Company by special resolution of the shareholders on 18th June 2020 at 9:30 PM, pursuant to section 241(2)(a) of the Companies Act 1993 (“the Act”). The Liquidators have made the appropriate enquiries and are of the opinion that they are not barred from acting under section 280 of the Act. Company Information The following information has been obtained from the Companies Office as at the time of the appointment: Date of Incorporation 28 June 2016 Company Number 6034748 Registered Office 23 Maka Terrace, Orewa, 0931 Trading Address Unit 3, 83 Ellice Road, Wairau Valley, Auckland, 0629 Type of Business Residential Construction Date Trading Ceased 18 June 2020 Shareholders Name Shareholding Adam James O’Gram 998 2,000 shares Rebecca Ann O’Gram 336 2,000 shares Lachlan Sherwood Sloan 1 2,000 shares Rochelle Maree Sloan 1 2,000 shares Terra Firma Enterprises Limited Directors Name Adam James O'Gram 664 2,000 shares Address 23 Maka Terrace, Orewa 0931 Commentary The Company traded from its incorporation in residential construction. The Liquidators have been advised that the reason for the failure of the Company which led to the appointment of the Liquidators is due to excessive labour costs and other project cost overruns which eroded profit and margins over time resulting in an unsustainable business model. We are advised by the director that cost overruns totaling over $400,000 across two specific projects have caused the Company’s cashflow to become expended. The Company has not been able to recover sufficient profitability to sustain the servicing requirements of its overall liability position. Following the exit from Level 4 Lockdown due to COVID-19, the shareholders have assessed the financial position of the Company and elected to place the Company into liquidation. To date, the Liquidators have sent notices to the Company’s officers and professional advisors pursuant to section 261 of the Act requesting the delivery of the Company’s books, records and legal files. The Liquidators have also frozen the Company’s bank account and have issued notices to the secured creditors asking for details of their debt and securities. Sika Homes Limited (In Liquidation) Page 2 of 10 Liquidators First Report The Liquidators have also attended the four construction sites that the Company was completing and locked these sites down. As part of this process, the Liquidators have taken steps to secure assets of the Company while an assessment of each build can be undertaken. Upon appointment the Liquidators have also called a meeting of current staff and contractors and terminated their employment and contracts, respectively. Steps are now been taken to engage with each build owner to determine the fate of their respective construction contracts. Statement of the Company’s Affairs A statement of the Company’s estimated financial position as at the date of liquidation is provided in Appendix One. This statement has been prepared based on information obtained from the Company, its officers and creditors. The information has yet to be verified for validity and may be subject to change. Proposals for Conducting the Liquidation The Liquidators will take steps to realise the assets of the Company and continue their investigations into the affairs of the Company to determine if there are any insolvent transactions and/or breaches of any relevant legislation by the Company or its officers. It is too early to comment on any recoveries and the likelihood of a distribution at this stage. However, if it is determined that there are sufficient funds to make a distribution to creditors, the Liquidators will contact the creditors if they have not already provided their claim forms along with any applicable documentation in line with AML/CFT laws. Any distributions will be made in accordance with Schedule 7 of the Act. The Liquidators will also be assessing whether there is any prospect of recovering the outstanding debtors of the Company noting that they relate primarily to the partially completed construction contracts. Assets The Liquidators have been advised that the Company had the following assets as at the date of the liquidation: • • • • • • • • Debtors Vehicles Excavator Heavy Duty Trailer Trailers x 2 Sundry Tools, Plant and Equipment Office Furniture Sale Agreement for the Purchase of Land It is too early to determine the realisable value of these assets and/or any potential claims available to the Liquidators. The Liquidators are also investigating whether there are any other assets and/or potential claims which may give rise to additional recoveries for the benefit of creditors. Creditor Claims In accordance with section 255(2)(c) of the Act, a schedule of all known creditors of the Company as at the date of this report is provided in Appendix Two. Secured Creditor Claims A search of the Personal Properties Securities Register disclosed 13 security interests registered against the Company. The Liquidators have issued notices in accordance with section 305 to the secured creditors on the date of their appointment. Secured creditors have 20 working days after that date to elect which of the following powers they wish to exercise: Sika Homes Limited (In Liquidation) Page 3 of 10 Liquidators First Report a. Realise the property subject to their charge; or b. Value the property subject to their charge and claim in the liquidation as an unsecured creditor for the balance of their claim, if any; or c. Surrender the charge to the Liquidators for the general benefit of creditors and claim as an unsecured creditor for the whole debt. If a secured creditor fails to notify the Liquidators of their election within 20 working days, their charge will be surrendered to the Liquidator for the general benefit of creditors and they may claim in the liquidation as an unsecured creditor for the whole debt. If you hold a security interest over the Company’s assets or have a retention of title over assets owned or controlled by the Company and you have not yet been contacted by the Liquidators in regard to your interest, please contact the Liquidators immediately. Preferential Creditor Claims The Liquidators have received some claims for unpaid wages and holiday pay from former employees and have yet to receive a claim from Inland Revenue. Unsecured Creditor Claims If you are an unsecured creditor and have not already done so, please complete and return the Unsecured Creditor’s Claim Form by no later than 13th July 2020. Please visit the following link to our website (http://khovjones.co.nz/resources/) to download and complete a claim form. Alternatively, you can email us at creditor@khovjones.co.nz if you wish to have a claim form emailed to you. Meeting of Creditors A notice of dispensing with the meeting of creditors is provided in Appendix Three. Estimated Completion Date It is not practicable to estimate the date of completion of the liquidation or if there will be any distribution at this stage. However, if you are a creditor or shareholder and wish to assist the Liquidators by providing funding for recovery action or by providing additional information that would assist the liquidation, please contact the Liquidators as soon as possible. The Liquidators request that the information be provided in writing along with copies of supporting documentation. Statutory Reporting Further reports will be issued every 6 months and a final report will be issued at the conclusion of the liquidation pursuant to section 257 of the Act. Declaration of Independence, Relevant Relationships and Indemnities (DIRRI) In accordance with the RITANZ Code of Professional Conduct, the DIRRI has been provided to the Company’s creditors directly. If you have yet to receive this, please contact the Liquidators. Sika Homes Limited (In Liquidation) Page 4 of 10 Liquidators First Report Contact Information If you require any further information or have information that can assist the Liquidators, please contact: Contact Steven Khov Email steven@khovjones.co.nz Phone Number 0800 275 554 Postal Address PO Box 302261, North Harbour, Auckland 0751 Steven Khov Kieran Jones Joint Liquidator Joint Liquidator Dated 25th June 2020 Sika Homes Limited (In Liquidation) Page 5 of 10 Liquidators First Report Appendix One Statement of Company’s Affairs Sika Homes Limited (In Liquidation) Statement of Affairs as at 18 June 2020 Note Assets $ $ 1 Cash Nil Debtors 62,330.81 Land Purchase Deposits 3 15,000.00 Vehicles & Trailers 4 Unknown Sundry Tools, Plant and Equipment Unknown Excavator Unknown Total Assets Unknown Liabilities 2 Preferential and Secured Creditors Preferential Creditors – Employees (Wages & Holiday Pay) 45,583.03 Preferential Creditors – IRD (GST) 34,601.60 Preferential Creditors – IRD (PAYE) 111,977.46 Secured Creditors – ASB 115,031.15 Secured Creditors – UDC 32,159.71 Secured Creditors – Nissan Financial Services 35,774.49 Secured Creditors – Other 5 Unknown Total Preferential and Secured Creditors Unknown Estimated Deficit before Unsecured Creditors Unknown Unsecured Creditors Shareholder Loan 224,785.37 Other Unsecured Creditors 394,926.02 Total Unsecured Creditors Unknown Estimated Deficit (before costs of liquidation) Unknown All figures are in NZD and include GST. Notes to Statement of Company’s Affairs 1. Assets are recorded at book value. 2. Liabilities are recorded by ranking. 3. This relates to a bare piece of land located at Schnapper Rock. Sika Homes Limited (In Liquidation) Page 6 of 10 Liquidators First Report 4. Two vehicles both which have PMSI finance owed to UDC and Nissan Financial Services, respectively. 5. Creditors with financing statements including: Placemakers, Carters Building Supplies Limited, Stevenson Construction Materials Limited, FE Investments Limited, Mirental Limited. Disclaimer This disclaimer should be read in conjunction with the disclaimer earlier in this report. The purpose of the report is to give creditors of the Company an indication of the financial position of the Company as at the date of appointment of the Liquidators in accordance with section 255 of the Companies Act 1993. Khov Jones have not audited the information obtained and they do not accept any liability to any party relying on the information presented. Sika Homes Limited (In Liquidation) Page 7 of 10 Liquidators First Report Appendix Two Schedule of Company Creditors Creditor Name Creditor Address Adam O'Gram Withheld Apex Metal Roofing Limited Unit C, Level 1, 199 Lincoln Road, Henderson, Auckland 0610 ASB Bank Limited PO Box 35, Shortland Street, Auckland 1140 Auckland Brick and Block Laying Limited 1b Delamare Court, Sunnynook, Auckland 0632 Axis Consultants Limited PO Box 34-658, Birkenhead, Auckland 0746 Black Steel Mobile Limited PO Box 106, Kumeu 0841 CADviz Limited PO Box 302387, North Harbour, Auckland 0751 Carters Building Supplies Limited Private Bag 94027, Manukau City, Auckland 2241 CKL Surveys Limited PO Box 99463, Newmarket, Auckland 1149 Concrete Projects Limited PO Box 60310, Titirangi, Auckland 0642 Concrete Tank Repairs & Machine Hire 44 Thompson Road, RD 1, Warkworth 0981 Continental Stairs Limited PO Box 70034, Ranui, Auckland 0655 Cube-S Scaffolding Holdings Limited PO Box 86, Albany Village, Auckland 0755 CWF Brick & Blocklayers Limited PO Box 20134, Glen Eden, Auckland 0641 Desiree Holliday Withheld EPG Limited PO Box 42133, Orakei, Auckland 1745 Level 15, 66 Wyndham Street, Auckland Central, Auckland 1010 FE Investments Limited Fletcher Distribution Limited t/a Placemakers Albany Flexigroup (New Zealand) Limited PO Box 90935, Victoria Street West, Auckland 1142 FV Aluminium 2011 Limited PO Box 302089, North Harbour, Auckland 0751 George Dodson Graphic Detail Limited Withheld 285 Ellerslie-Panmure Highway, Mount Wellington, Auckland 1060 28 Tizard Road, Birkenhead, Auckland 0626 Grove Hardware Limited t/a Mitre 10 Private Bag 92908, Onehunga, Auckland 1643 Haigh Workman Limited 6 Fairway Drive, Kerikeri 0230 Hirepool Limited PO Box 12048, Penrose, Auckland 1061 Hyunyo Tak Withheld Inland Revenue PO Box 39090, Wellington Mail Centre, Lower Hutt 5045 Jonathan Brown Withheld Just Bins 2017 Limited PO Box 300634, Albany, Auckland 0752 Kennards Hire NZ Limited PO Box 58978, Botany, Auckland 2163 Leilani O'Gram Withheld Liteworx Limited 79 Deacon Road, RD 2, Kumeu 0892 Luwade Felix Withheld GH Concrete Pumping Limited Sika Homes Limited (In Liquidation) PO Box 302039, North Harbour, Auckland 0751 Page 8 of 10 Liquidators First Report Maia Pene Withheld Miit Limited Level 1,2b William Pickering Drive, Albany, Auckland 0632 MIRental Limited Nissan Financial Services NZ Limited Building 1, 2B William Pickering Drive, Albany, Auckland 0632 Private Bag 11007, Manawatu Mail Centre, Palmerston North 4442 PO Box 83101, Wellington 6440 Peter Brennan Withheld Peti Buckley Withheld Precision Earthworks & Drainage Limited 4A McWhirter Place, New Lynn, Auckland 0600 Prestige Loos Limited PO Box 45078, Te Atatu, Auckland 0651 Prime Strategies Group 249 Monowai Road, RD 1, Silverdale 0994 Registered Master Builders Association PO Box 1796, Wellington, Wellington 6140 Roofing Accessories Limited PO Box 302096, North Harbour, Auckland 0751 Sam Cox Withheld Save Ya Roofing Unknown Sels Electrical Services PO Box 14426, Panmure, Auckland 1741 Shore Spark Electrical Limited 11 Wynyard Street, Devonport, Auckland 0624 Steel Plumbing PO Box 25417, St Heliers, Auckland 1740 Stevenson Construction Materials Limited 364 East Tamaki Road, Manukau, Auckland 2013 Studworx Limited 6/192 Main Road, Kumeu 0892 Synapse Search PO Box 302829, North Harbour, Auckland 0751 Terra Firma Enterprises Limited 126 Bawden Road, Dairy Flat, Dairy Flat 0792 Tony McIntyre Withheld Top Arch Limited Unit G12, 23 Edwin Street, Mt Eden, Auckland 1024 UDC Finance Limited PO Box 91145, Victoria Street West, Auckland 1142 Monument Finance Limited Sika Homes Limited (In Liquidation) Page 9 of 10 Liquidators First Report Appendix Three Notice to Dispense with Meeting of Creditors and Notice of Claim Steven Khov and Kieran Jones both CA ANZ Accredited Insolvency Practitioners were appointed as joint and several Liquidators of the Company on 18th June 2020 at 9:30 PM pursuant to section 241(2)(a) of the Companies Act 1993 (“the Act”). Notice of Liquidators to Dispense with Meeting of Creditors Pursuant to section 245 of the Act The Liquidators’ propose to dispense with the meeting of creditors pursuant to section 245 of the Act. This decision has been made on the basis that it would add unnecessary costs to the liquidation and they are unaware of any other issues that require consideration by the creditors. Therefore, no meeting of creditors will be called unless the Liquidators receive notice in writing from a creditor within 10 working days of their receipt of this notice. Meetings of Creditors or Shareholders Pursuant to section 314 of the Act Section 314 of the Act permits any creditor or shareholder of the Company to request the Liquidators, in writing (at any time during the course of the liquidation), to call a meeting of creditors or shareholders for the purpose of: • • Voting on a proposal that a liquidation committee be appointed to act with the Liquidators; and To choose the members of the committee. Should any creditor wish to give notice they require a meeting of creditors to be called they are requested to provide the following information in their notice: • • The nature of the business they require to be transacted at any such meeting; and The text of any motion they require to be put to any such meeting. Please note that the Liquidators may decline a request for a creditors meeting pursuant to section 314(2) of the Act. Notice to Creditors to Claim Pursuant to Liquidation Regulation 12 of the Act Notice is hereby given that the Liquidators fix 13th July 2020, as they day on or before which the creditors of the Company are to make their claims and to establish any priority their claims may have, under section 312 of the Act, or to be excluded from the benefit of any distribution made before the debts are claimed or, as they case may be, from objecting to the distribution. Dated 25th June 2020 Steven Khov Kieran Jones Joint Liquidator Joint Liquidator Sika Homes Limited (In Liquidation) Page 10 of 10 Liquidators First Report