Mayor in $28m Stonewood collapse claim

Jim Boult
Jim Boult
Queenstown's mayor and the founder of Stonewood Homes are facing claims to pay more than $28 million over the collapse of the construction company, amid allegations of reckless trading.

Both Jim Boult and former Stonewood managing director Brent Mettrick deny the claims. Mr Boult said he acted in "good faith" as a director. Stonewood went into receivership on February 22, 2016, owing unsecured creditors $15 million.

It was later placed into liquidation. About 110 home buyers were affected by the collapse.

High Court documents  show Mr Boult, a former director, and Mr Mettrick are accused of three counts of breaching their duties as directors.

It is claimed the pair allowed companies to continue trading while insolvent, and Mr Boult "actively dissuaded" Mr Mettrick from accepting another buy-out offer, while making offers himself at the same time.

The $28,369,000 civil suit was lodged in the Christchurch High Court by liquidators Rhys Cain and Rees Logan.

They are also claiming $267,592.20 from Mr Boult, alleging his director remuneration was unauthorised and unfair. Mr Mettrick is being sought for an additional $1,814,273.

The claim relates to Stonewood Homes Ltd (SHL), Stonewood Homes New Zealand Ltd (SHNZL) and Holmfirth Group Ltd (HGL). The liquidators allege the group of companies traded from February 2014 while facing financial difficulties.

These include insufficient working capital, extended build times, warranty and remedial issues and franchisees failing to pay franchise fees and causing reputational damage.

The claim states "from approximately December 1, 2014, and certainly by March 31, 2015", continued trading was likely to cause "substantial risk" to creditors, but the directors allowed it to continue.

In his defence Mr Boult denies the allegations, denies the companies were insolvent for several months as claimed and said he did not make an offer to buy the company.

He determined it was "reasonable" for them to continue to trade given funding and/or investment opportunities  were "being actively explored"  which would "alleviate the group’s financial challenges".

Four parties were considering investment in 2015: Philip Carter, Guoxin, INNO and Warwick Isaacs/Mr Boult, the claim reads.

Mr Boult admits he initially expressed "scepticism" about the likelihood of Guoxin investing. Neither Guoxin nor Mr Carter made an offer.

He said what the claim described as a "final offer" from INNO was not in fact an offer, and was "not capable of acceptance as alleged".

Mr Mettrick said the INNO proposals were not conditional offers.Mr Boult also denies making an offer to Mr Mettrick with Mr Isaacs, who was appointed chief executive of the group on March 31, 2015.

He said he was involved in submitting several "heads of agreement" (non-binding documents setting out key terms) in January 2016 which proposed a purchase by Denali Management Ltd or its nominee.

Mr Boult and his wife, Karen, are the sole directors of Denali Management Ltd.

But in his statement of defence, Mr Mettrick admits Mr Boult and Mr Isaacs made two offers to him.

Mr Boult resigned as a director on February 1, 2016.

The plaintiffs say SHL and SHNZL were invoiced for a total of $667,299 over two years for Mr Boult’s remuneration.

They allege the payments were not authorised, unfair to the companies and not entered in the interests register.

Mr Boult agrees the companies made payments to Denali Management Ltd, but otherwise denies the claim.

His remuneration was pre-negotiated with Mr Mettrick, and he was "entitled to assume that Mr Mettrick had taken the appropriate steps" to authorise it.

In their statements, Mr Boult and Mr Mettrick both denied that they put their personal interests before the interests of the companies, and said they relied on information reported by staff.

Mr Mettrick founded the Stonewood Homes franchise in 1987, with 21 franchise locations across the country.

No hearing date has been set.

- Daisy Hudson

 

By the numbers

Mr Boult and/or Mr Mettrick

- $6.941m (or amount decided by the court) for allegedly allowing SHNZL to continue trading while insolvent.

- $18.528m (or amount decided by the court) for allegedly allowing SHL to continue trading while insolvent.

- $2.9m for breach of directors duties.

Mr Boult

- $267,592.20 for repayment of director fees.

Mr Mettrick

- $1,814,273 of the funds obtained from ASB, which were allegedly used contrary to their agreed purpose.

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