Why do companies about to go into receivership tell their customers that “everything is fine”.
Is it deceit, blatant lies or is it because staff and management “just don’t know”.
Whatever the reason the grief, financial and emotional fallout for all affected parties is huge.
This week KordaMentha were appointed receivers of both Stonewood Homes Limited and
Stonewood New Zealand Limited (The master franchisor of the Stonewood Group).
Korda Mentha partner Grant Graham in a press report said” unsecured creditors were understood to
be owed approximately $15 million”. No information was provided on the size of the companies
At this point I raise the question, would you rather be a secured creditor ranked with the banks and
IRD in the distribution of monies or an unsecured creditor where the creditor queue often leads to
“an empty cupboard door”. If you are in the creditor line behind unsecured creditors you are not
registered on the PPSR (Personal Property Security Register).
It’s crazy to think that this legislation was introduced by the Government in 2002 and business
owners often still have a hazy understanding of what it means for their business.
When things unfortunately go wrong in business and they do, it is vitally important that not only do
you register your collateral on the PPSR but also that your registration is correct and most
importantly valid. I recently met with a Blenheim based Electrical Company that was caught up in the
Stonewood Marlborough branch liquidation last year when they were placed into receivership owing
more than $1 million. The heartbreak for this hard working family was that they did indeed register
their collateral on the PPSR after rumblings Stonewood was in trouble only to be told that the detail
registered in the first instance was incorrect and consequently invalid. The error cost them $70,000.
For every story of despair there is one of hope. I have seen an ever growing number of Contracting
companies in the Marlborough, Nelson, West Coast regions assess their risk and make a concerted
effort to protect their businesses.
A number with interests in the volatile Christchurch market have engaged EC Credit Control to work
alongside them as a strategic partner reviewing all relevant documentation to ensure compliance
with appropriate legislation.
If only Fencing hire company ATF services, caught up in the Stonewood collapse to the tune of
$50,000 and Switched on Property Maintenance around $15,000 had recognised the warnings signs
and protected their respective businesses. By working alongside EC Credit Control to ascertain
collateral description you’ll be set up with your unique Secured Party Group (SPG) ID on the PPS
Register and join the ranks of the secured creditor. What a sensible decision!