Armstrong Downes Commercial owes $9.2 million to unsecured commercial creditors

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Wellington building company Armstrong Downes Commercial (ADC) went into liquidation last week owing $9.2 million to 320 unsecured commercial creditors.

Ten years after the company was founded, ADC shareholders appointed David Ruscoe and Russell Moore of Grant Thornton New Zealand as liquidators at 7am last Monday.

He had eight building projects underway across the Wellington area, including the $125 million Paddington residential development with 150 townhouses on Taranaki St and a 40-apartment project in the center of Lower Hutt.

The company has also been involved in the redevelopment of the Frank Kitts playground on Wellington’s seafront.

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ADC had an estimated deficit of $8.7 million, the liquidators said in their first report, released Friday. She owed $2.8 million to her secured creditors and $9.2 million to 320 unsecured creditors.

The company’s liabilities were $17.6 million, including income tax payable of $979,154, and it had assets worth $8.9 million, including $3.4 million in cash.

<a class=Contractors have been barred from the site of Paddington’s $125 million residential development on Taranaki St.” style=”width:100%;display:inline-block”/>

Tom Hunt / Stuff

Contractors have been barred from the site of Paddington’s $125 million residential development on Taranaki St.

There will likely be claims for additional damages from breaches of contract, Ruscoe and Moore said, estimating project damages at $4.5 million.

Further investigations were likely.

“Given the interdependent nature of the group and the way it operates, we will investigate the intergroup debt position to identify any debt owed to the company.

“We will investigate the affairs of the company and its directors, including related parties, during the period prior to our appointment to determine if there are any other avenues of redress available to the company.”

ADC had two directors, Tony Doile​ and Simon Taylor​. Its shareholder, 2 HB Ltd, was owned by Doile and Yellow Roof Trustees, which in turn were owned by Taylor and Lower Hutt attorney Eugene Collins.

Doile and Taylor were also shareholders in Armstrong Downes Group Holdings Ltd and Armstrong Downes Construction Ltd, both of which launched in November 2021.

Liquidators said two of the company’s largest construction projects suffered substantial losses due to a fixed price in an economic environment characterized by spiraling costs and other difficulties.

“Since pricing, there have been significant issues and market factors that have adversely affected the business, including substantial cost increases outside of those budgeted, sourcing and supply chain issues and labor shortages,” they said.

“The contracts were also made before the onset of the global Covid-19 pandemic, which caused significant disruption and caused delays due to site access restrictions at various times.”

Steven Sutorius, whose development company Thames Pacific was behind the development of Paddington, said last week he was skeptical of liquidating claims was beyond ADC’s control.

“It’s easy for them to point fingers at the supply chain and Covid, but I think the issues run a little deeper than that,” he said Tuesday.

Thames Pacific paid $1.5 million to ADC to go to subcontractors for the project on March 20, while another developer, Lower Hutt’s High Street Holdings, made a $600,000 payment for subcontractors. contractors at the end of April.

ADC was to receive a total of $574,000 in holdbacks, money set aside to ensure a subcontractor returned to repair any immediate defects on a project.

Construction companies are required to hold retentions “in trust” so they can be easily accessed in the event of the company’s bankruptcy, and liquidators said ADC holds its retentions in a separate account.

“We are reconciling the retentions and will seek court approval to manage the orderly return of retentions held by the company to the affected parties.”

All ADC construction sites have been temporarily closed to protect company assets and other parties.

It was not possible to estimate when the liquidation would close, the liquidators said.

ADC, which launched on May 25, 2012, operated a construction management company that managed projects in the Wellington area.

It did not employ any staff directly, although it was most often a general contractor, its workforce being employed by related companies.

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