Espada creditors ponder next step

By FIONA ROTHERHAM

Creditors of failed Auckland aluminium manufacturer Espada Aluminium face a decision whether to pursue action against the company's owners for trading while insolvent.

Liquidator Stephen Lawrence, of Ferrier Hodgson, told creditors the company continued to trade for four months after an accountant's advice that it was insolvent.

Unsecured creditors' claims for that period amount to $58,000.

Mr Lawrence told creditors there were insufficient funds to take court action against the directors - husband and wife John and Deborah Leslie - which could cost up to $65,000.

The liquidator's preliminary view is that large amounts of shareholder drawings from the company may be invalid. Once the current accounts are reconstructed, Mr Lawrence is likely to demand that the directors repay what could be a big debt.

Espada went into voluntary liquidation last November in the face of a winding-up petition from its largest creditor and supplier, Capral Aluminium. Unsecured creditors total $350,000.

Mr Lawrence said the last time the company bank account was in credit was in August 1998. It appeared that creditors - and Espada's bank through a $75,000 overdraft - funded the business for more than a year.

Mr Leslie started the company from the basement of his house in 1989, installing aluminium joinery on contract.

After it secured a big contract with fast-food chain Georgie Pie, the company moved into a leased Onehunga factory.