Tempest director puts his case to Ebert creditors for a change of liquidators

Tuesday, 30 October 2018

Damien Grant of Tempest Litigation Funders.

Tempest Litigation Funders director Damien Grant made his pitch to 11 creditors of collapsed Ebert Construction in Christchurch, the first of three informal meetings with the next ones to be held in Wellington and Auckland.

He encouraged them to demand a formal creditors meeting and ditch the Ebert liquidators at accounting firm Grant Thornton in favour of BDO.

Director of Ebert Construction, Kelvin Hale.

He estimated he had about 60 per cent of the support he needed so far and encouraged the creditors not to give up but to give him their proxy votes to ensure the greatest possible recovery of funds.

Ebert collapsed in August owing about $45 million, of which unsecured creditors were owed $33.8m when subcontractor retention payments of $9m were included.

The multi million dollar mansion of embattled director of Ebert Construction, Kelvin Hale, at Lowry Bay, Eastbourne.

* Collapsed construction firm Ebert linked to previous company failure

* Ebert Construction builds mansion for its managing director**

Tempest's business involves buying bad debts from creditors at a discounted price, which Grant said in this case was 'approaching a seven figure sum', and therefore potentially worth a lot of money to him depending on the level of recovery.

The reason Grant wanted a change in liquidators was because Grant Thornton was appointed by the Ebert shareholders, and although he was sure they would conduct an appropriate liquidation, his preferred BDO liquidators had a history in pursuing parties, including directors, when appropriate.

He said the Grant Thornton liquidators should have called a creditors meeting already to explain many of the issues, but he had learned from secondary sources a meeting was being organised to be held in the next week or two.

Major questions included the situation of two associated companies Wakefield Plant and Nidus which owned properties worth $26m.

There were also questions about the construction of a mansion in Lower Hutt by Kelvin Hale, reportedly using Ebert contractors, he said.

Hale had a registered security over $3.5m he advanced the company before its collapse, meaning he theoretically stood ahead of unsecured creditors for payment.

Grant also highlighted the fate of the $9m of retentions - money which is owed to subcontractors but held back by main contractors or clients such as Ebert in case additional work was required to finish a project.

Retentions money should have been held in trust accounts and one of the first things the receivers and liquidators should have done was hold a meeting for those affected, Grant said.

Grant said he hoped some larger creditors would come forward and support him - 'there are one or two whales out there. I don't know about the 100 or so staff. They are victims too. They have jobs and mortgages so I'm nervous about approaching them'.

When asked by a creditor about the worst case scenario, Grant said if he didn't gain sufficient support to replace Grant Thornton it might at least galvanise them to take firm action and sue directors or other parties.

Grant asked the creditors at the meeting not to email details of the meeting to the media because he wanted to control the flow of information.

However he expressed good humour when the Stuff reporter revealed his presence, having arrived a few minutes after Grant had asked if there were reporters present, with a view to asking them to leave.