Du Val shareholders urge Government to take company out of statutory management

Tuesday, 3 September 2024

Du Val Property Group was placed into Interim Receivership on August 2.

A few weeks later the Government put it into statutory management.

Minority shareholders of Du Val say this is doing more harm than good.

Minority shareholders of Du Val Property Group have written a letter to the Government urging for the business to be taken out of statutory management, fearing the worst for the company if that doesn’t happen.

The shareholders, which doesn’t include Du Val Property Group (DVPG) founders Kenyon and Charlotte Clarke, have written a letter to Commerce and Consumer Affairs Minister Andrew Bayly asking for it to be released from statutory management and for a meeting within the next seven days to prevent further financial harm to the company and mental stress to shareholders.

The Auckland-based property company was put into interim receivership at the request of the Financial Markets Authority on August 2.

Following a report from receivers PwC New Zealand, the Government took the rare step of placing Du Val into statutory management on August 21.

“ Statutory management is the option of last resort used to deal with complex corporate failure where ordinary insolvency law is inadequate,” Bayly said at the time.

“It is intended to protect investors and creditors from further losses, and to enable the orderly administration of a company's affairs.”

However, in the letter to Minister Bayly, which is signed by Karl Lindeman on behalf of the Committee for the Minority Shareholders, it says the opposite of this has happened and the situation with Du Val has got significantly worse since the statutory management began.

The letter states that Du Val has received Property Law Act 2017 Notices from funders which notifies the company that it’s defaulted on loans.

“The PLA notices we were provided by our funders specifically advise the cure to the default - being the end of PwC's involvement as interim receiver or statutory manager,” the letter says.

Earlier this year, most investors in Du Val transferred their investment from the mortgage fund to become shareholders in a company working its way towards an eventual IPO in the future

“We understand the FMA wrote to the DVPG Directors on 2 July 2024 confirming that investors had received sufficient information to choose whether to become shareholders within DVPG,” the letter says.

“One calendar month later, the interim receiver was appointed which makes us concerned as to the motives of the FMA at that time, and now.”

Charlotte and Kenyon Clarke have been gagged from speaking to the media about the FMA’s investigation but in Kenyon’s first interview since the interim receivership, he did reveal some details about what has happened since August 2.

“I can say that our accountants have supplied information to the shareholders, where we believe we’re a solvent and good business, that has $5.1 million in its corporate bank accounts and we have the support of its lenders,” Kenyon Clarke said.

The PwC report did acknowledge there was $5.1 million in the company accounts on August 1.

The FMA confirmed to Stuff that Clarke is unable to speak about the investigation.

“While there are confidentiality orders in place regarding the FMA’s investigation, these do not prevent Mr Clarke from talking about any aspect of his business affairs,” the FMA said in a statement.

“If a person is found to have breached a confidentiality order under the FMA Act, as in place for the FMA’s investigation, the penalty is a fine not exceeding $300,000.”

But Lindeman’s letter says shareholders are concerned the public have been only getting one side of the story.

“While the DVPG Board has effectively been silenced, [John] Fisk (one of PwC’s statutory managers) appears to be all over the media and has released information asserting $250 million of debt is outstanding,” it says.

The shareholders argue in the letter that this figure of $250 million isn’t balanced against the value of projects on hand which, they say are worth considerably more than that.

It also says the statutory management is destroying value in DVPG, rather than preserving it and adds that the shareholders want to select a new board and leadership team that they have confidence in, to reengage with their lenders and to get projects back on track.

Although Clarke has nothing to do with the letter, he understands what the shareholders are going through.

“The shareholders should be free to appoint a board of their choosing and that doesn’t need to include me,” he told Stuff.

“It would be wrong of me whilst I was under investigation to have continued as a director, you’d want to resolve those issues before you moved on.

“So from that perspective, this isn’t about me, it’s about the 67 people who own the business.”

The Ministry of Commerce and Consumer Affairs said in a statement the Minister has received the letter this afternoon and will respond formally as per usual parliamentary process.

“The decision to place the Du Val Group into statutory management followed a recommendation from the Financial Markets Authority.

“Statutory management suspends all current liquidation processes and enables the affairs of the Group as a whole to be dealt with in an orderly and expeditious way.

“As you will be aware, there are ongoing Court proceedings, including in relation to what information will be released to the public about the matter. While the matter is before the courts he cannot comment further. Any questions should be directed to the statutory managers.”

The FMA and PwC have been approached for comment.