The prospect of small creditors receiving the money they are owed by failed Middlemarch tourism operator Dave Thomson is looking unlikely as his debts rise and the sale of his assets raises less than expected.
Two of Mr Thomson's companies, Middlemarch Tourism Ltd and Cycle Surgery Franchises Ltd, were placed in liquidation in August owing at least $967,000 to financial institutions, Inland Revenue and 47 unsecured creditors, including 24 Otago Central Rail Trail accommodation providers.
Mr Thomson said at that time seven properties that he owned or co-owned were on the market and he hoped to be able to repay creditors.
But a six-monthly report issued last week by the liquidator, Ian Nellies, of Insolvency Management Ltd, showed Mr Thomson's debts had grown to more than $1 million and there was unlikely to be money left over for unsecured creditors from the sale of "heavily mortgaged" properties.
Neither was there any realistic prospect of recovering franchise fees owed to Cycle Surgery Franchises that were disputed by the franchisees, a second report said.
In the six months since the liquidation, Middlemarch Tourism Ltd had received claims from creditors totalling $1.07 million: $856,823 to three secured creditors, $85,355 to two preferential creditors and $133,598 to 28 unsecured creditors, that report said.
It was looking "less hopeful" that unsecured creditors would receive any money, Mr Nellies told the Otago Daily Times yesterday.
"I understand that the people who have not been paid are frustrated. But the reality is, if there is no money, there is no money."
Some unsecured creditors seemed to have accepted that reality, he said, as only 28 of the original 47 unsecured creditors had so far put in claims. There was no deadline for the lodging of claims and they would be accepted "right up until the end". He was unable to say when the liquidation would be completed because that depended on the sale of properties.
The final report on Cycle Surgery Franchises recommended the company, which had no known assets and no known creditors, be wound up.
It was owed a "large amount" in unpaid licence fees, the report said.
Mr Nellies said yesterday the figure was more than $100,000.
But he said the fees owed were disputed by the franchisees and the liquidators had decided it was uneconomic to pursue legal action to recover the fees.
Mr Nellies said his office had received numerous calls from creditors and others about Mr Thomson's business activities before and since the liquidation. Several people have also contacted the Otago Daily Times.
The concerns include Mr Thomson selling Cycle Surgery Middlemarch and the Rail Trail Shuttles website (which is not a registered company) several months before the liquidation to his partner, Philippa Wilkie, and continuing to work for her as an employee; and that Mr Thomson had continued to operate Blind Billy's Motel and Holiday Camp in Middlemarch and taken chattels from it.
None of the allegations were proved, Mr Nellies said.
Investigations confirmed the website was sold for a fair value.
While Blind Billy's had not traded since the liquidation, the liquidators had allowed a few individuals to occupy units and had used the rents - $6456 over six months - to maintain the electricity supply and assist with the upkeep of the property.
Mr Thomson had taken some chattels from Blind Billy's but that had been with the permission of the liquidators, he said. Some other chattels would be sold and the money returned to the liquidators.
Mr Thomson continued to live in a small community where he was visible to his creditors, Mr Nellies said. But creditors had to understand Mr Thomson was allowed to continue to live and work where he chose.
"He is not a bankrupt so there are not the restrictions on him which a bankrupt [person] would have."
Contacted yesterday, Mr Thomson said he had so far sold three properties, a vacant section, a tourist lodge and 22ha of farmland. All had sold for much less than he had hoped, with two selling for less than what was owed on their mortgages.
"In this property market we have taken a hiding ... The sales haven't helped anything yet."
Asked whether he still hoped to repay all creditors, Mr Thomson said he could not answer that, as it depended on the sale of properties. He was hopeful that selling Blind Billy's for at or near its rateable value of $800,000 "would make a world of difference" for creditors.
Asked if it was difficult to continue living in Middlemarch, he said it was not.
"Ninety-nine percent" of people along the rail trail were "fantastic" and only a small number "forgot how we helped them" by sending business their way, he said.
