$1m for probe into Stonewood failures

‘‘We are looking at what happened in the leadup and key decision-makers and whether their involvement constituted any breach of the rules under the Companies Act.’’ Ernst and Young liquidator Rhys Cain

Up to $1 million will be spent investigating the activities of Stonewood Homes companies before the Christchurch building firm’s collapse.

Holmfirth Group Limited entered liquidation in March, while subsidiary companies Stonewood Homes Limited and Stonewood Homes New Zealand Limited followed in April.

The companies were placed into receivership in February.

Ernst and Young liquidator Rhys Cain confirmed $1m from ‘‘external sources’’ had been obtained for the investigation.

He would not reveal where the funding came from.

The probe will look into the ‘‘governance, management and events’’ leading up to all three companies entering receivership.

A liquidator’s report stated a ‘‘major point of interest’’ at a creditors’ meeting in June was whether there would be an investigation into the cause of the collapses and the conduct of directors and management.

Creditors asked whether the investigation would identify avenues of recovery for the liquidators, given no funds were available following the liquidations.

Former directors, who resigned during the lead-up to the company going into receivership, were considered to be directors of the companies.

Their conduct would be included in the investigation in the same capacity as Stonewood’s current directors, the report stated.

The investigation would include recovery proceedings for insolvent transactions, including those with companies connected to directors.

‘‘We’ll be doing an investigation through the books and records of the company first,’’ Cain said.

‘‘I’m in no way suggesting there is any fraud happened.

‘‘In fact, I’m pretty sure there hasn’t been. But, if we did find a fraud, then obviously we’d refer that to the police.

‘‘But that’s not what we’re looking for.

‘‘What we’re looking for are actions that are in breach the directors’ duties and transactions that we can recover.’’

Cain said no particular person was being targeted by the investigation.

‘‘We are looking at what happened in the lead-up and key decision-makers and whether their involvement constituted any breach of the rules under the Companies Act,’’ he said.

Initial liquidator reports indicated that 400 companies and contractors were owed nearly $20m by Stonewood Homes Limited and Stonewood Homes New Zealand.

The second Holmfirth report showed Stonewood Homes’ creditor claims totalled $9.27m.

Creditor claims for Stonewood Homes New Zealand sat at $3.82m.

The amounts were based on creditor claims filed to date.

A ‘‘significant number’’ of creditors were yet to submit claims, the liquidators said, so it was expected the number may increase.

Stonewood Homes in Christchurch was sold by receivers to Inno Capital in March.