Insolvency specialist Damien Grant has been appointed to a financially troubled 727-residence South Auckland housing business listed as owing creditors $140 million.
Companies Office records show Waterstone Insolvency’s Grant is now the voluntary administrator of Ormiston Rise Ltd (in receivership), appointed by its board of directors and now working with the company where creditors claim $140m.
The company went under in May, leaving people who had paid deposits for new homes expressing concern about their future.
Receivers were then assuring buyers that their deposits – including those with homes purchased under the KiwiBuild scheme – were safe and they were working with the intention of completing the development.
The project is a master-planned community in Totara Park on the opposite side of the motorway from Manukau city centre.
Ormiston Rise Future Vision – NZ Build Group from Buildmedia on Vimeo.
Plans are for 727 freehold terraces, duplex and standalone homes with three, four or five bedrooms, plus a minimum two bathrooms: “Ormiston Rise is a new kind of development centred around creating a welcoming, diverse community where you can get to know your neighbours. Designed with families in mind, these homes will offer multiple bedrooms and bathrooms, landscaped courtyards and will be surrounded by great schooling,” buyers were told.
Grant said today he was only appointed two days ago and had requested documents to thoroughly understand the situation but he said the site had changed hands recently.
“I know the land has been sold to Neighbourly Ormiston Rise and some of the directors of that company were also directors of Ormiston Rise Ltd. They had recently been replaced by the shareholder who put me in.”
Receivers were appointed by big US business Arena Alceon “who may have been protecting the deposit holders”, Grant said today.
“I know there is $137 million outstanding [claims by creditors]. I understand the sale price was in the order of $200 million but I have been unable to verify that,” he said of the land deal.
He will now spend at least a week fully understanding what has occurred so he can do his best as the voluntary administrator, he indicated.
Waterstone says administrators have powers very similar to liquidators, “except they are charged with trying to save the company”.
They do that by trying to get the creditors to agree to waive some or all of the money owed and allowing the company to come out of administration and to trade on under the same ownership, Waterstone says.
The administration period is usually between 30 to 40 days.
“It is a quick way to regain control of your business if a deed of arrangement is the desired outcome. It allows you to make a genuine contribution to paying your creditors off over time. You are able to continue your business and your creditors should also agree to keep supplying your company,” says Waterstone, which specialises in this area.
Companies Office records show Ormiston Rise directors are Jason Peleuila Dobbie of Grey Lynn, Brent John Gilchrist of Milford and Clinton Neil Webber of Central Auckland.
Shareholders are Foundation Developments of Ponsonby with 70 per cent, Arena Alceon NZ Creditor Partners of the United States with 19.5 per cent and Urban Resort Investments of Ponsonby with 10 per cent.
Ormiston Rise’s receivers are Neil Jackson and Grant Graham of Calibre Partners.
The business was established for the big residential property development which is planned to take shape in four stages with 727 homes, they said in their first report on July 7.
Work on construction only started in 2020 but then building work stopped in May.
The company went under on May 7 but civil works continued, although “construction of homes is currently on hold”.
In July, Jackson and Graham said they had begun trying to sell the company whose balance sheet was deliberately being kept secret so it did not show the value of either land and buildings or total assets.
The receivers said that was due to commercial sensitivity and they had at that stage found one party with a personal property security over the business.
A secured creditor was owed $137.6m and trade creditors and Inland Revenue could also be owed money although no claim or confirmation of any claim was received by then from IRD, the receivers said. Trade creditors are owed $3.03m.
A related company, Ormiston Rise Development was also in receivership. That is the business which is the developer, the receivers pointed out.
On social media on May 9, Ormiston Rise reassured buyers about their money, saying it was safe.
“We realise news of the receivership is unsettling to purchasers, who will have many questions. The receivers need time to get through their initial work before they will be able to answer those questions properly,” the business aid.
“All purchasers should be assured that their deposits are safe. They’re lodged in a lawyer’s trust account and they won’t be affected by this action,” it said then.
No announcements have been made on that social media page since May 9.
“The company is in this position because the lenders to the Ormiston Rise development became concerned about construction progress. The next step is for the receivers to work with the lenders over the coming weeks to make a plan for the future of the development.
“The lenders have indicated that they want the project to be completed as planned but the details of how that can be done must be worked through,” the business told buyers.
An 0800 number is being put in place so that people can call for information. We will let you know as soon as that is ready, it said then.
People reacted angrily to that news, one person swearing and making a reference to the failure.
The project at 17 Tiffany Close told buyers it would be “a new master-planned community in East Auckland’s Ormiston that brings together contemporary living, sustainable thinking and affordable housing”.
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