A final decision could be reached today over the future of debt-laden Dunedin-based Jennian Homes Otago Ltd, which has asked southern creditors to accept payment of 20c in the dollar for debts of $581,000 and let it continue trading.
The company has reached one threshold for acceptance of the proposal to creditors, but is stalled on the second part of the offer and was still in negotiations over the weekend.
Jennian Homes Otago owner Kurt Reed offered to inject more than $100,00 of borrowed money into the ailing franchise and pay the majority of creditors 20c in the dollar owed, but on the proviso more than 50% of creditors agreed, and 75% of the debt's value was represented within the acceptances; with a deadline of July 20 for acceptances.
A "substantial majority" of more than 46 of the 93 creditors had accepted the proposal, Mr Reed has said, but the proposal is stalled because the 75% debt-value threshold has not been reached, with at least one major creditor not agreeing to the proposal.
Letters explaining the situation were delivered to creditors during the weekend.
Mr Reed was contacted on Friday and said then he was still in talks with the major creditors and "wants to come to an arrangement which will satisfy some substantial creditors".
"I should have a definite [answer] by Monday," Mr Reed said.
Following a poor trading period for the six-months to March, when Jennian home sales locally plummeted from 11 to just two, Jennian amassed total debts of $581,000 to 93 creditors, while it has been estimated by business advisers its assets "might fetch" $35,000 in a forced sale.
The proposal to creditors is being overseen by Insolvency Management Ltd and spokesman Iain Nellies has said recently that Jennian's cash resources were "exhausted".
If receivership or liquidation proceedings were started by a creditor the likelihood of a return to unsecured creditors would be "greatly diminished, and could in fact be marginal".
Aside from the five Jennian homes under construction in Otago there are a further five awaiting consents to proceed.
The parent company has said Jennian had never failed to complete a home in 30-years and it intended that "record to continue".
Jennian Homes Central Otago Ltd is a separate franchise and is unaffected by the proposal to creditors of Jennian Homes Otago Ltd.
