Medical Kiwi owes nearly $9m as liquidation looms

Tuesday, 3 December 2024

Medical Kiwi executive chairman Aldo Miccio has denied claims he and another director were paid while others were not days before the company entered administration.

Christchurch medicinal cannabis company Medical Kiwi Ltd is facing liquidation, owing creditors nearly $9 million.

The liabilities include $63,000 to staff in wages and holiday pay, $176,000 to Inland Revenue (IRD) and, crucially, a $4.5m preferential security to Emichrome Proprietary Ltd ‒ the private family company of Malaysian-born Australian billionaire Kie Chi Wong.

Medical Kiwi, also known as Aether Pacific Pharmaceuticals, entered voluntary administration on November 20 citing “significant financial challenges”. It had endured revenue and growth problems for the last two years and its directors have faced claims of mismanagement by former staff.

As the majority secured creditor, Emichrome must support any proposal to restructure the company. It has indicated it will not, meaning the administrators will almost certainly recommend Medical Kiwi enters liquidation at a watershed meeting next month.

Medical Kiwi director Peter Win, inset, and his boat. Win has said he sold the boat, allowing him to not receive a salary for more than a year.

That would trigger a sale of assets including 500kg of cannabis of indeterminate quality and a suite of patents held by a subsidiary company, Hardie Health Ltd, already in liquidation.

At a spirited creditors’ meeting on Monday, investors demanded answers from executive chairman Aldo Miccio and founding director Peter Win.

Administrator Damien Grant of Waterstone Insolvency was at the Christchurch premises of Medical Kiwi Ltd in recent days.

Particularly, they wanted clarity on the pair’s claim they reinvested more than $1m they each received from a company share sale in 2021 and bank statements that appeared to show both were paid in October and November ‒ the latter just two days before administration ‒ at a time when staff were not.

Administrator Damien Grant shut down the exchange, but not before Miccio responded: “Pete and I welcome the investigation,” he said. “We dispute your claims. Forty-eight hours prior [to entering voluntary administration] all the current staff were paid.”

Medical Kiwi Ltd’s Christchurch premises remained locked. About 500kg of stock has been moved from the site.

Grant urged for calm. “I appreciate there is a lot of passion here,” he said. “This is not a witch hunt of the directors … [The administrators] have statutory powers including interviewing the directors under oath and we will be doing that.

“I am right now struggling to see where that money has gone. I can guarantee we will find out where that money has gone.”

The value of Medical Kiwi’s assets is unclear. At the meeting, the administrators presented an itemised estimate with a book value of $10.4m, but it was heavily caveated. Nearly $2m worth of plant and equipment assets were estimated to be worth just $450,000 and $4.5m of subsidiary shares were simply assigned as “unknown”.

The market value of the 500kg of cannabis, since moved from the company’s growing facility in Wigram and described as “of varying quality”, also remained to be seen.

However, any money recovered from its sale would go first to unpaid staff and then IRD rather than Emichrome, despite its preferential status elsewhere, including for the value of the patents held by Hardie Health, if sold.

“Emichrome is the one with all the power here,” Grant told the meeting. “They are the ones with the ability to make decisions.”

The watershed meeting would likely be held this month or in January, he said, where creditors could vote on liquidation or a restructure, known as a deed of company assignment. “I’m sorry we don't have better news for you,” Grant said.