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Mainzeal Cross-Appeal Claims Compensation of $73m

Published: Tue 9 Apr 2019 01:55 PM
Media release, 9 April 2019
Mainzeal Cross-Appeal Claims Compensation of $73m
Following the appeals lodged by the former directors of Mainzeal, the liquidators of the failed construction group have filed cross-appeals on behalf of the companies and their unpaid subcontractors and creditors.
Liquidator Andrew Bethell, BDO, said the cross-appeals against the directors will challenge the $36m order for contribution awarded by the High Court. The cross-appeals also challenge the apportionment of liability by the High Court between the directors based on different degrees of culpability.
“The High Court found that the former directors exposed the creditors to illegitimate risk by using creditors’ money to continue trading while insolvent for a number of years. The Liquidators welcome that decision on liability. The directors’ breach of duty caused a total loss of $110m to the creditors. However, the High Court applied a discount of two-thirds to the starting point for contribution. The Liquidators considered that the starting point for contribution should be not less than $73m or two-thirds of the $110m total losses suffered by creditors.
Mr Bethell adds “Richard Yan and Dame Jenny Shipley both held powerful positions in the Group, were more culpable than the other directors, and their contribution to the losses suffered by the company should be higher.
“Mr Yan’s culpability is well addressed in the High Court judgment. Ms Shipley was a director and chairperson of Mainzeal for 9 years, from 1 April 2004 until 31 December 2012. The company collapsed in February 2013. Between April 2004 and October 20009, she was also a director and shareholder in Richina Pacific, Mainzeal’s Bermuda based owner, a company that used Mainzeal money together with other funds to acquire substantial assets in China that are now extremely valuable.
“The High Court judgement was clear on the factual basis supporting the finding that the former directors breached their duties in allowing the company to continue trading while insolvent. We remain fully committed to ensuring these directors are held accountable and that creditors are compensated for their losses,” said Mr Bethell.
The appeals and cross-appeal are expected to be heard in the Court of Appeal early next year.
ENDS

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