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Liquidators seek millions from mayor and company founder

Sep 14, 2018

Liquidators for a failed home building company want more than $25 million from Queenstown Lakes Mayor Jim Boult and company founder Brent Mettrick.

Legal papers, released to RNZ today, show the liquidators from Ernst & Young accuse Mr Boult and Mr Mettrick of allowing Stonewood Homes to continue to trade while insolvent.

Additionally the liquidators want Mr Boult to repay more than $267,000 in director's fees they say were unfair.

Ernst & Young's Rhys Cain and Rees Logan have filed legal proceedings in the Christchurch High Court.

Mr Boult, who was elected Queenstown Lakes District Council Mayor in October 2016, was a non-shareholding director of the company between August 2014 and February 2016.

Stonewood Homes went into receivership in early 2016 owing more than $25 million to creditors.

Receivership of the company group was completed in March with $5.9m paid to ASB - the secured creditor - and all staff and Inland Revenue Department claims settled.

However, more than $10m of unsecured creditors remained, as well as a significant shortfall to secured creditors.

In 2016, it was revealed an investigation into the failed company was underway and Mr Boult's involvement in the company would form part of it.

At the time, Mr Boult told media he welcomed the investigation and had carried out his duties as director with "with care and diligence".

He had been involved with a group which looked at a potential buy-out of Stonewood Homes, but this did not eventuate.

The Chow brothers bought some of the assets of the group.

Mr Boult was previously the chief executive of Christchurch International Airport.

In their statement of claim, the liquidators said the company group traded recklessly from about "1 December 2014 and certainly by 31 March 2015" until it went into receivership in February 2016.

"The continued trading of the group was likely to cause substantial risk to creditors," the claim said.

"As at the reckless trading date SHL [Stonewood Homes Limited] had been insolvent for nine months.

"As at the reckless trading date SHNZL [Stonewood Homes New Zealand Limited] had been insolvent for eight months."

The liquidators claimed the group's debt facilities were completely drawn down and the companies were suffering significant trading losses.

During this time, the liquidators claim Mr Boult attempted to purchase or invest in the group, which was a conflict of interest as he stood to gain financially.

In response, Mr Boult, through his lawyer, said he acted in good faith, made inquiry when necessary, and relied on the advice of others.

He denied trading recklessly or acting improperly during his time as a director.

Mr Boult denied his remuneration was unfair.

Mr Mettrick said in his statement of defence he carried out all his duties as a director in good faith and relied on reports, data and other advice was he was entitled to under the Companies Act.

Attempts to contact the pair today were unsuccessful.

Mr Boult previously provided a statement titled "Liquidator's claims strongly rejected".

"Jim Boult rejects the claim(s) made by the liquidator for Stonewood Homes and confirms he will be vigorously defending any suggestions he did not fulfil his duties as a director," the statement said.

"He was a non-shareholding director of the company for 18 months from August 2014 to February 2016 when he resigned.

"Mr Boult says he became involved with the business to help the owner address a number of issues facing the company following the Canterbury earthquakes. He resigned when it became apparent those issues could not be resolved.

"I have provided in-depth information to the liquidator that clearly demonstrates I fulfilled my obligations and duties as a director. I am confident any investigation will support this."

The liquidators would not comment further.

"As the matter is before the court we do not wish to discuss it beyond that," Mr Logan said.

In the liquidators most recent report filed with the Companies Office - which covered the period from 22 October 2017 to 21 April 2018 - they said "we will not be disclosing the detail of our investigation report at this stage as we do not wish to prejudice any future actions".

No date for a hearing has been set.

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