The failure of the Otago franchise of Signature Homes appears set to leave more than 150 unsecured, mainly Otago business creditors out of pocket, with total debts to all creditors estimated at $1.3 million so far.
Eleven days ago, Mulwil Construction Ltd, the Signature Homes franchisee in Otago since 2007, was placed into voluntary liquidation by its managing director, Murray Wilson, claiming at the time an outstanding $160,000 debt of one client had tipped the balance.
Liquidator Hudson Biggs for Keogh McCormack and Trevor Laing and Associates in Dunedin, said in his first report he could not yet accurately predict the prospect of a dividend to unsecured creditors.
However, information to date indicated "it is unlikely that a dividend will be available to unsecured creditors", Mr Biggs said.
The more than two-page list of creditors includes builders, designers, scaffolders, contractors and joinery shops through to a florist, moteliers and cleaners, with the liquidators estimating up to $1.3 million may be owed to the ANZ National bank, six secured creditors and the more than 150 unsecured creditors.
After going into liquidation, Mr Wilson predicted he "could easily see" other companies in the industry placed in receivership or liquidation following Mulwil's liquidation.
A previous and unrelated Otago franchise holder of the Signature Homes brand placed his company in liquidation in 2005, at the time owing an estimated more than $1 million to creditors.
Mr Biggs said Mulwil's Signature Home show home at St James Place in Fairfield in Dunedin, the company's largest asset, had a rateable value of $535,000. However, he noted a number of creditors had "priority claims" to the show home and two vehicles, the latter estimated to be worth $20,000.
"The liquidators are not optimistic, given the residential property market, a surplus will be created for unsecured creditors via the sale of this [Fairfield] property," Mr Biggs said.
There was understood to be up to 10 uncompleted Signature homes around Otago and Southland, and Signature Home's parent company has said it was confident they would all be completed under guarantee.
Several home owners have contacted the Otago Daily Times since the liquidation was announced, unhappy with the work and cost to date of their homes - an aspect which the liquidators have been assessing.
Mr Biggs said while some contracts were "all-but completed" and requiring minimal work to finish, there were "a number of building contracts" in "various stages of completion".
"Many contracts are behind and/or, over budget," Mr Biggs said.
Mr Biggs said a "number of factors" had contributed to Mulwil's failure, but it was too early to speculate on details, which would be available from the next report in six months.
He said Mulwil had experienced "difficult trading for some considerable time" and its director, Mr Wilson, had made "numerous attempts to solve the cash-flow problems".
"This included attempts to obtain cash through the sale of assets, in particular the show home. This sale failed after parties abandoned conditional sale and purchase agreements,' Mr Biggs said.