Liquidators to examine Mainzeal’s Yan over incomplete financial records

Liquidators for Richina Global Real Estate say they‘re planning to examine company director Richard Yan because he has not been forthcoming with all relevant financial records.

Richina Global was placed into court-ordered liquidation in February and since then, Mr Yan has staunchly opposed liquidators at BDO from rifling through the company’s files.

BDO is also the liquidator for the collapsed construction group Mainzeal, which brought the proceedings against Richina Global Real Estate, a related company.

“Despite our requests to the director, we have not been provided with, nor have we been able to locate detailed financial records of RGREL, including the accounting ledger which we understand is located in China. As such we have been unable to verify the accuracy of the Statement of Affairs,” the first liquidators’ report says.

Liquidators say Richina Global was involved in three company restructures in 2012 before the wider Mainzeal group collapsed which had “a significant impact on the level of its debt with related parties.”

Mr Yan claims it’s a conflict, perceived or real, for BDO to be the liquidators of the wider Mainzeal group of companies as well as Richina Global. Andrew James Bethell, Brian Mayo-Smith and Stephen John Tubbs are the appointed liquidators.

They have claimed in court, as well as the first liquidation report, a high number of transactions between the related companies.

“The appointment of the same liquidators across the Mainzeal/Richina Group will enable the liquidators to deal with complex related party transactions and restructures efficiently,” the report says.

In one restructure, debt of $15.2 million was transferred from Richina to Mainzeal in exchange for shares just five weeks before Mainzeal fell into receivership. Liquidators consider "those shares were worthless at the time of this restructure," the report says.

Richina Global’s liquidation is heading to the Court of Appeal on April 16. Since the liquidation, Mr Yan has lost bids in the High Court and Court of Appeal for a stay to suspend  the liquidation pending the outcome of the appeal.

Last week, a Mainzeal liquidation report shows the group has racked up $523,000 in legal fees since its collapse.

It's unclear when liquidators plan to examine Mr Yan. Under the Companies Act, liquidators have the power to require a director or shareholder of a firm in administration to "deliver to the liquidator such books, records, or documents of the company in that person's possession or under that person's control."

They can also seek to examine certain people, including directors and shareholders, under oath by the liquidator or lawyer "on any matter relating to the business, accounts, or affairs of the company." Failure for Mr Yan to comply can carry a penalty of up to two years in jail or a $50,000 fine.

sflores@nbr.co.nz