Staples Rodway Limited Level 9, Tower Centre 45 Queen Street Auckland New Zealand
PO Box 3899 Auckland New Zealand DX CP19042
Telephone: +64 09 309 0463 Facsimile: +64 09 309 4544 enquiries@staplesrodway.com www.staplesrodway.com
HILLCREST SERVICES LIMITED (IN RECEIVERSHIP) Receivers’ First Report on the State of Affairs Pursuant to Section 23 of the Receiverships Act 1993
Introduction Kevin David Pitfield and Gareth Russel Hoole were appointed joint receivers of Hillcrest Services Limited (In Receivership)(“the company”) by Capital + Merchant Finance Limited, on 3 August 2006 under the powers contained within a General Security Agreement dated 9 March 2004. This report has been prepared by the receivers in accordance with and for the purpose of Section 23 of the Receiverships Act 1993. Restrictions and Disclaimers The report is prepared for the sole purpose of reporting on the state of affairs with respect to the property in receivership and the conduct of the receivership. In compiling this report the receivers have relied on the accuracy of all relevant information provided by the management of the company. Whilst all care and attention has been taken in compiling this report, the receivers, Staples Rodway Limited, its employees and its agents do not accept any liability whatsoever arising from this report. This report is not intended for general circulation and all information contained in it is for the confidential use of the parties to whom it is provided in accordance with Sections 26 and 27 of the Receiverships Act 1993. This report is not to be disseminated or passed on to any other party without the receivers’ prior written authority or as may be required by law.
The financial particulars included in this report have been prepared from the company’s records and information supplied to the receivers by the company and its director. In preparing the particulars the receivers have not carried out anything in the nature of an audit or other verification procedure.
The receivers reserve the right (but will be under no obligation) to review the contents of this report and, if considered necessary, to revise the report in light of any information which becomes known to the receivers at a subsequent date. Events Leading To Appointment The company is owned by Poelima Miller (90%) and Darryll Raymond Chowan (10%). The sole director of the company is Patrick Anthony Darby of 33 Pupuke Road, Northcote. The company was indebted to Capital + Merchant Finance Limited in the sum of approximately $1,500,000 as at the date of appointment of the receivers. Such indebtedness arising from advances
Staples Rodway Limited. Chartered Accountants. An Independent Member of Baker Tilly International.
made by Capital + Merchant Finance Limited to the company for purposes of retiring existing loan facilities advanced by Motor Trade Finance Limited and to continue to provide funding for the company which was in the business of making advances to purchasers of motor vehicles from a related company. Those advances were secured by way of a registered General Security Agreement over the company. The company had defaulted on its repayments to the secured creditor and recovery action ensued, culminating in the appointment of the receivers. Particulars of the Assets Comprising the Property in Receivership The property in Receivership comprises all of the assets and undertakings of the company. At the date of the appointment of the receivers, those assets comprised a receivables ledger reflecting a balance collectible of some $4,026,525. However, upon making further inquiries it became evident that the ledger, in its virtual entirety, was in arrears at the time of the appointment of the receivers. Particulars of Debt and Liabilities Currently Outstanding and Requiring to be Satisfied from the Property In Receivership Due to Capital + Merchant Finance Limited secured by priority ranking General Security Agreement, a sum of approximately $1,500,000. The receivers have not been able to ascertain with any degree of certainty what other creditors may exist as the company has not maintained proper books and records. However, the receivers have been advised that the director had procured additional funding from certain investors who will now rank as unsecured creditors. The magnitude of such liability cannot be readily determined due to the lack of adequate financial records and the non-cooperation of the director. The apparent failure of the director of the company to keep proper accounting records could represent breaches of the Companies Act 1993 and the Financial Reporting Act 1993. Those potential breaches have been reported to the Registrar of Companies pursuant to section 28 of the Receiverships Act 1993. Proposals for the Conduct of the Receivership Given that the only asset of the company appears to be the receivables ledger referred to above, the receivers will seek to realise that ledger in the most efficient manner possible. However, upon being appointed, the receivers were advised by the director that only certain of the receivables reflected on that ledger are the property of the company. That statement was made, notwithstanding that the ledger is clearly denoted as being the property of the company and contrary to assurances made to the secured creditor that their security interest included that receivables ledger. This matter is now the subject of legal proceedings in the High Court. Proposals for Disposal of Receivership Property At the time of preparation of this report, negotiations were afoot between the receivers and a recognised collection agency for the latter to seek to make appropriate recoveries from the company’s debtors. Should those efforts not materialise, the receivers will work with the secured party to realise the property for its maximum potential, through the potential sale of the receivables ledger to a party who has expressed an interest therein.
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Amounts Likely to be Available for Payments to Unsecured Creditors The receivers cannot determine whether any amounts are likely to be available to unsecured creditors until they ascertain the full realisable value of the receivables ledger and resolve the matters in dispute and presently under the consideration of the High Court. Information Provided By the Company The Director of the company has been completely non-cooperative in making available the information required by the receivers to complete this report and to conduct their investigations into the affairs of the company, to the extent that the receivers have strong grounds to believe that information has been wilfully withheld, notwithstanding orders by the High Court to make such information and records available. Dated this 10th day of October 2006.
_____________________________ Gareth Russel Hoole JOINT RECEIVER
_____________________________ Kevin David Pitfield JOINT RECEIVER
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