Building franchise firm may owe over $600,000

Asset values have not yet been determined in the collapsed Jennian Homes Otago Ltd, but almost 90 creditors are estimated to be owed more than $600,000.

The first report of Dunedin liquidator Insolvency Management Ltd said it was "unsure" if there would be a dividend payable to any of the known 84 creditors, and all should proceed with making a claim.

Jennian Homes Otago owner Kurt Reed had sought to stave off receivership or liquidation by injecting more than $100,000 into the ailing company, but was unsuccessful in trying to get enough creditors on board to accept his offer of 20c in the $1, subsequently placing the company in liquidation early this month.

Part of the creditors' proposal included business analysis that the company owed mainly unsecured creditors $580,0000, while its assets at a forced sale may have realised $35,000.

According to the liquidator's report, a total of $602,000 is owed, with seven secured creditors with interests registered on the Personal Property Securities Register owed $35,700, some of whom have been repaid; four known preferential creditors owed $25,000, and 84 unsecured creditors owed $541,000, liquidator Iain Nellies said.

"Prior to liquidation after the offer to creditors was rejected, the franchisor cancelled the franchise, effectively bringing to an end the building and guarantee process," Mr Nellies said.

Outstanding Jennian Home contracts around Dunedin are to be finished by other, separate, Jennian Home franchises.

Asset values have not yet been determined.

They included money due from existing home projects, but subject to accounting, office equipment and furniture and a part-paid residential section.

"A number of assets have been disposed of by the company in the period leading up to the liquidation and the destination of the proceeds, whether fair value was obtained, and the sales, will be investigated," Mr Nellies said.

In consideration of the proposal to creditors, a large majority of the 93 southern creditors had agreed to the proposal, but the sticking point was that 75% of the value of the debt had to be represented in acceptances.

This fell short because of two corporate creditors' rejections.

Jennian Homes Otago is the fourth Dunedin-based branded building franchise company to fall into financial difficulties in as many years.

The others were 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 Central Otago Ltd is a separate franchise company and is unaffected by the liquidation of Jennian Homes Otago Ltd.

 

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