IRD pushes property business under. Carters, Fletcher, Mitre 10 are creditors

Unpaid taxes prompted Inland Revenue to go to court to have liquidators appointed to a North Shore house building and finance business, where a group of big-name national businesses registered an interest.

PwC’s Craig Sanson
and Malcolm Hollis are liquidators of First Construction Group, First Finance and First Investment Group, estimated to owe $1.9 million.

Businesses with security over the First companies are:

* Carters Building Supplies, owned by billionaire Graeme Hart’s Rank Group;

* Fletcher Distribution trading as PlaceMakers, owned by multi-billion dollar NZX-listed Fletcher Building;

* Riviera Hardware, trading as Mitre 10 Mega New Lynn;

* Yes Finance with security over motor vehicles;

* Merchant Finance.

Some businesses told the liquidators no amounts were outstanding and they had discharged their securities.

However, Auckland Council was also listed as a creditor along with Fletcher Distribution, Carters Building Supplies, Huanxin Wei, IRD, Merchant Finance, Riviera trading as Mega Mitre 10 New Lynn and Yes Finance.

PwC’s appointment followed IRD’s High Court application, prompted by the unpaid taxes.

The First companies operated with a related entity, Apollo Group, which traded as a kitchen and bathroom manufacturing business on the Shore and the PwC liquidators are also running that business now.

First Group provided project management and financing services to customers with contracts to Apollo in Porona Rd, Wairau Valley. First’s director and shareholder is Xiangyu Fan, who operated in the house construction, finance and residential property fields, PwC said.

But the accountants aren’t having much luck chasing the boss.

“We have interviewed the acting director of the companies and requested that he completes our standard liquidation questionnaire. However, we have not yet received such documentation.

“We have been unable to contact the director and are unaware of other records of the companies that may exist. The online records are not accurately reconciled,” the liquidators wrote.

Nor had they been advised about the reasons for First’s insolvencies. But unpaid tax obligations had resulted in Inland Revenue moving on the companies, PwC said.

First employed three people at the date of liquidation so the liquidators terminated all the employment agreements.

Whether employees are owed money in wages and holiday pay remains unknown.

Inland Revenue was $189,000 from the business in GST, PAYE and other employee deductions.

Unsecured creditors want $1.8m.

Carters and Fletcher registered security over the businesses in early 2019.

IRD has previously said it wants to work with businesses which owe taxes. The Herald reported earlier this year that about 50,000 construction sector businesses were behind on tax as Inland Revenue launched a campaign to encourage businesses to pay.

Spokesman Richard Philp said in March: “We know around 50,000 customers within the construction industry have at least one outstanding return and/or some form of debt to Inland Revenue.”

Inland Revenue then launched a campaign to encourage tradies to get their tax back on track.

“The construction industry is crucial to New Zealand’s economy and continues to grow,” the tax department said.

Philp added: “We know businesses in the construction sector have struggled with increases in the cost and availability of materials, supply chain constraints and labour shortages over the last few years.”

The construction sector had the highest amount of tax debt and customers in liquidation, Philp said.

The crackdown comes at the same time as a string of financial failures in the sector. Many of those have IRD in the list of creditors, owing millions of dollars in tax.

* Anne Gibson has been the Herald’s property editor for 23 years, having won many awards, written books, founded the National Business Review’s property section in 1985 and covered property extensively here and overseas. She joined the Herald in 2000.