Wellington doctors Kathryn Percival and David Pirotta stand to lose more than $500,000 if their Marlborough Sounds modular home isn't built. Photo / Mark Mitchell
Wellington doctors Kathryn Percival and David Pirotta stand to lose more than $500,000 if their Marlborough Sounds modular home isn't built. Photo / Mark Mitchell
The financial failure of Auckland off-site residential builder Podular Housing Systems has been estimated at $5.2 million, making it one of the largest collapses in the modular housing sector.
The first report on the Wairau Valley-headquartered company from liquidators Benjamin Francis and Simon Dalton of Gerry Rea Partners estimated a $5.2m deficit.
The report also identified more than $2m in deposits paid by customers whose homes weren’t started. That money was also in the general trading account so customers’ deposits couldn’t be identified.
“The liquidators have identified in excess of $2,000,000 of deposits that have been paid by customers for which work has yet to be started. The deposits were held in the company’s general account and do not appear to have been spent for the purposes for which they were paid.
“This bank account was overdrawn at the commencement of liquidation and, as a result, there is no ability for customers to trace their deposits. The liquidators will be investigating this matter and taking appropriate steps,” said the report, issued yesterday afternoon.
Francis and Dalton also raised questions about how Podular was being run: “The liquidators have concerns regarding the conduct of the management of the company and will conduct an investigation into the failure of the company.”
The Herald highlighted the plight of some Podular customers last month, including Wellington doctors Kathryn Percival and David Pirotta who estimated $500,000-plus losses. Podular was to build their modular home in its factory, then deliver it completed to their Marlborough Sounds property within months. Plans were finalised last August, yet they still don’t have their house.
A Podular home shown on social media. Photo / Facebook
The liquidators said unsecured creditors were owed an estimated $2.7m, Inland Revenue $1.1m and employees $330,000. They can’t say when they will finish work or if anyone will get any money.
Income didn’t cover operating costs and funders wouldn’t loan more money. The company was unable to continue to trade so shareholders Ilan Gross, of Grey Lynn, and Charles Lewis Innes, of Mt Eden, called in liquidators.
Before the failure, they tried to find buyers but no offers were received, the liquidators said. Those who paid deposits also told the Herald of the sales attempts.
The liquidators said they had received “a significant number of inquiries from affected customers and are working to identify the situation on each customer’s project and contract”.
They didn’t say exactly how many house buyers are affected but the Herald has reported on six cases so far.
Liquidators said a number of parties had expressed entitlements to specific projects that remain work in progress.
“The liquidators are working with our legal advisors to assess the priorities between the competing interests and will liaise with the impacted parties directly. Work has paused on all ongoing contracts. We are currently assessing the status of these contacts. The liquidators have not engaged in any discussions with any party regarding the sale of the business or contracts. Such actions would be premature until the legal status and circumstance of each client is clarified,” they said.
All employment contracts had been terminated.
Podular marketed itself as: “Nationwide delivery and installation on-site, qualified Homestar practitioner, sustainable, green homes and buildings for happier, healthier New Zealanders.”
It advertised “architectural transportable homesNew Zealand-wide, prefab homes delivering top quality build at affordable prices”.
The company was incorporated on July 28, 2020, according to the Companies Office. It traded for a little over two years.
Gross owns 95 per cent of Podular and Innes only 5 per cent.
Gross told the Herald last month he was hoping to sell the company to overseas buyers who could then take over customers’ stalled house builds and finish them. Customers said Gross had been telling them this for weeks yet they hadn’t seen evidence for it.
Companies Office records showed that in October, Gross upped his shareholding from 90 to 95 per cent and Innes cut his from 10 per cent to 5 per cent.
The liquidators said in yesterday’s report that assets potentially able to be realised include $650,000 of plant, machinery and vehicles. Accounts receivable are yet to be confirmed.
The estimated $5.2m deficit comes about from a $2.5m deficit before unsecured creditors combined with a $2.7m deficit potentially owned to unsecured creditors.
On November 19, the Herald reported Podular customers feeling physically sick. One said she ordered a bach for the Kaipara coast north of Auckland: “There are moments when I feel physically sick, absolutely physically sick and incredibly worried and stressed. You can’t sleep, it disrupts and occupies too much of your waking hours.”
Another customer is a single mum who worried she could now spend years squeezed into a caravan with her 10-year-old son after she said she paid $265,000 in progress payments to Podular for a home that was supposed to be finished last Christmas but still hasn’t been delivered.
The liquidators said a meeting of creditors will be held. They set the date and time for that as well.
