Another Otago building franchise operator has been placed in voluntary liquidation - owing more than $400,000 - after a compromise for creditors failed to gain their backing.
Between 2005 and 2010, three national building franchises have run into similar problems in the South.
Several Otago-based franchise operators tied to Signature Homes, Landmark Homes or Jennian Homes were placed in liquidation, initially owing hundreds of thousands of dollars, the parent companies having to step in and take over contracts.
Paul McCrone, the 80% shareholder of Renovations and Extensions Dunedin Ltd (which traded as Smith & Sons in Cumberland St, Dunedin), placed the company in the hands of liquidators Trevor Laing and Associates on July 12.
Trevor Laing's first report on the company was released yesterday and estimated company assets at $75,000 and total liabilities at $423,000, leaving an estimated shortfall of $348,000.
There are 70 unsecured creditors, estimated to be owed $235,000, and Mr Laing said it was "unlikely" there would be sufficient funds to pay them.
He said the company first noticed a decline in business last year, which created cash-flow problems. It appeared work costings were inaccurate, which resulted in "significant losses on work completed".
However, the company operations were reviewed in May-June, restructuring indicating it could again be profitable.
Mr Laing said a compromise was put to creditors but rejected, and Mr McCrone determined the only alternative was liquidation.
The company has 14 security interests registered against it on the Personal Property and Securities Register, and is likely to owe GST, PAYE tax, wages and holiday pay.
Parent franchise company Smith & Sons Renovations and Extensions started in Queensland in March 2008 with 20 offices opening across Australia and New Zealand within 18 months, according to its website, which yesterday listed 16 offices around New Zealand.
Renovations and Extensions Dunedin Ltd had rights to three areas around Dunedin and had been trading about three years.
