Builder's hopes with creditors

Kevin Stanley, Stanley Group MD. Photo / NZME.

About 42 creditors of Matamata-headquartered builder Stanley Construction (Waikato) are owed $1.9 million.

Kevin Stanley, Stanley Group managing director, said that was the scale of the issues at the business, now seeking a compromise with those creditors to be decided at a 1pm meeting at the Novotel Hamilton on March 23.

"This was caused by a system error on a single project that the company needs to take responsibility for," Stanley said, clarifying that there were no industry trends which caused the problem and nor was it related to modular construction after the failure of Auckland's eHome.

"Our modular business is trading very well. We've got good, sustainable growth. We've been operating in the prefabrication industry in New Zealand for about 12 years," he said.

Difficulties were limited to Stanley Construction (Waikato), he said.

"Stanley Group is continuing to trade well and profitably. The creditors' compromise being sought follows significant losses from a project completed by Stanley Construction (Waikato) in 2014," Stanley said.

"It's unfortunate and we have been working hard to try to right the situation. Construction is a risky business. We have been very fortunate to have fantastic support from our suppliers."

Of the $1.9 million, $400,000 is owed to Stanley Group which was the single largest creditor, Stanley said.

"We are a bespoke construction company specialising in difficult construction and in retail, restaurants and some remediation," he said.

The struggling company had approached financial specialist Jared Booth of insolvency and business recovery specialists McDonald Vague to write to the creditors and ask for their support.

Stanley said he was optimistic that creditors' compromise would stave off the need for liquidation or receiver.

Creditors included Stanley Group's joinery operation which supplied internal fittings such as kitchens to the business, he said.

Other creditors are owed about $1.5 million for goods, materials and subcontracting services.

Booth told creditors the builder had been under significant financial pressure for some time and was relying on Stanley Group's support.

Problems were due to losses from the single project "and insufficient subsequent work and margins to allow such losses to be cleared. In mid-February, it became apparent to SCW's directors that it would no longer be able to trade without entering into a compromise with all creditors of the company," Booth wrote.

Difficulties with the Matamata business come around the same time as the country's biggest housing prefabricator, eHome, has gone into receivership with Tony Maginness of McDonald Vague looking to sell that business and recover about $17.5 million for creditors.

Valiant Homes, an Auckland building contractor, has also gone into receivership and liquidation, with creditors chasing almost $5 million from it. Liquidators were appointed by the company's shareholder, Hamish Clarke, on March 4. Receivers were appointed the next day.

• Stanley Construction (Waikato) creditors' meeting, Novotel Hamilton, 1pm Monday March 23