Jennian Homes Otago Ltd is be placed in voluntary liquidation owing more than $500,000, following a failed bid by owner Kurt Reed to stave off closure with a proposal to creditors to pay them 20c in the dollar owed.
Assurances have been given by the main franchisor that affected homes around Dunedin would be completed.
The proposal to creditors was rejected by two corporate creditors owed a total 30% of the entire debt.
In an email and interview yesterday, Mr Reed confirmed he had "no alternative" but to place the company in voluntary liquidation, after failing to get the two corporate creditors to accept the proposal.
In a letter being sent to creditors today, Mr Reed said "without their acceptance of the proposal, it is impossible to achieve the required 75% approval by value".
"Accordingly, and unfortunately, there is no alternative but to place the company in voluntary liquidation. That is being done now," he said.
While a large majority of the 93 southern creditors had agreed to the proposal, the sticking point was that 75% of the value of the debt had to be represented in acceptances and this fell short because of two corporate creditors' rejection.
Jennian Homes franchise parent Tauranga-based managing director Richard Carver was in Dunedin during the weekend, and said yesterday he "absolutely guaranteed" all homes affected would be completed.
Five Dunedin homes are under construction and a further five consented.
Mr Reed said arrangements had been made for "all houses remaining under contract to be completed in accordance with their contracts, plans and specifications".
According to one Dunedin person with a partially-built Jennian Home, who did not want to be identified, Mr Carver gave assurances during the weekend their house would be completed.
In the original proposal to creditors, posted out last month, business advisers outlined Jennian Homes Otago owed $581,730 to 93, mainly Otago, unsecured creditors, while a forced sale of assets might fetch about $35,000.
Over a six-month period to March, Jennian Home sales had plummeted from 11 to 2; but work had since picked up to five homes under construction.
Mr Reed said nationally, annual new-home consents had fallen from 33,000 to 10,000.
"That is the greatest house building downturn in living memory. It has unfortunately seen many independent and franchise builders cease operations," he said.
Jennian Homes Otago is the fourth Dunedin-based branded building franchise company to fall into financial difficulties in as many years; two being separate Signature Homes franchisees owing about $2.4 million at their respective liquidation dates and a Landmark Homes franchisee owing more than $800,000.
Jennian Homes Otago Ltd, incorporated in November 2007, has one director, Paula Reed, and its 100% shareholder is Southbuild Holdings Ltd, whose directors are Kurt and Paula Reed, owning respectively 10% and 90% of shares in the company.
Another registered company, Otago Homes Ltd, was incorporated in early June this year, with Mrs Reed as the sole director while the shareholding is split 50-50 between Mr and Mrs Reed.
Jennian Homes Central Otago Ltd is a separate franchise company and is unaffected by the liquidation of Jennian Homes Otago Ltd.
