Avoca's fall expected to cost millions

The receiver of four Avoca building industry companies says losses will run into the millions of dollars.

Lloyd Hayward of Meltzer Mason Heath said yesterday that he was still at the initial investigation stage but expected major losses would soon be revealed.

Just how much money will be available for building subcontractors working on Avoca's three large Auckland building sites is also yet to be identified.

Hayward was appointed this week, after Avoca's directors suffered crippling losses on their projects. Escalating labour costs, materials price increases and problems at an Albany retirement job were some of the major reasons cited for the collapse.

Avoca projects were:

* The commercial building at 29 Apollo Dr at Albany.

* Finishing the four-level amenities block including a hospital for Fairview Lifestyle Management at its retirement complex.

* The four-level 44-unit Alto on St Jude apartment block in Avondale.

Security fences and guards were posted at the sites on Wednesday, when subcontractors doing electrical, plumbing and roofing work were turned away.

Hayward hopes to release the financial forensics this month, well ahead of the statutory deadline. His report will be posted online at the Companies Office website.

"It's early days yet, and we don't even know the total debt for unsecured creditors," he said yesterday.

Receivers were required to pay out preferential creditors first, which included Inland Revenue and employees, followed by directors and unsecured creditors, Hayward said.

The owners of Avoca Group, which is not in receivership, exercised their debentures and called in the receiver to Twilight Residential Construction, Twilight Construction, Avoca Commercial Construction and Avoca Residential.

Avoca Group's directors are Stephen Taylor, Michael McKeown and Robert Neil. They are also Avoca Group's shareholders, and the Government's Personal Property Securities Register shows all three have registered debenture-holders.

Avoca's website shows Taylor and McKeown founded the Eden Tce-based building firm in 1990 and were joined by Neil in 1996.

McKeown has blamed crippling labour costs, punitive material price increases and problems with its biggest job - the four-level amenities block with a hospital at a retirement village at Albany - for the collapse.

He has also predicted that many other building companies could go under in coming months.

Avoca built 21 shops at Dress-Smart's retail outlet centre in Onehunga, North Harbour Tennis Centre, the award-winning Cumulus office/parking block in Parnell, the Karaka horse stables complex and Domain Terraces.

Builder bust

* One of Auckland's largest builders, Avoca, called in receivers Wednesday.
* The company blames rising costs for the collapse.
* Losses are expected to run into the millions of dollars.