Christchurch-based medicinal cannabis company liquidated owing $9m

Wednesday, 5 February 2025

Former Nelson mayor Aldo Miccio is the executive chair of Medical Kiwi Ltd. He was excused from attending the meeting in which the company was placed in liquidation this week.

Medicinal cannabis company Medical Kiwi Ltd is in liquidation, owing nearly $9 million.

The Christchurch-based firm had had revenue and growth problems for the last two years and was placed in voluntary administration in November, citing “significant financial challenges”.

No viable salvage strategy was presented at a creditors’ meeting on Tuesday, and a resolution to liquidate passed without objection.

The move was heavily foreshadowed, but now means liquidators Waterstone Insolvency can focus on recovery.

Of the $8.83m owed, the biggest liability is a $4.5m preferential security to Emichrome Proprietary Ltd ‒ the private family company of Malaysian-born Australian billionaire Kie Chi Wong.

Liquidator Damien Grant was sober about other creditors’ prospects. “Realistically, for unsecured creditors the only form of recovery is in breaches of director’s duties.”

Liquidator Damien Grant said unsecured creditors of Medical Kiwi had little chance of any payout.

On this, he said, there were “absolutely issues in play”.

Medical Kiwi, now known as Aether Pacific Pharmaceuticals (APP), also owes $2.3m in shareholder loans, nearly $1m to unsecured trade creditors, $176,000 to Inland Revenue and $63,000 to staff.

The latter two may yet be paid through the sale of 500kg of cannabis recovered from APP’s Christchurch premises, the proceeds of which they, not Emichrome, had first entitlement to.

About 500kg of cannabis had to be moved from APP’s Christchurch facility in November as the company’s cannabis cultivation licence expired. It is being held securely elsewhere until it can be sold.

At the meeting, Peter Drennan of Waterstone said they were in discussion with several potential buyers and a tender would likely be set up by the end of the month. The cannabis had a book value of $759,000 but the liquidators estimated real worth at $220,000.

Outside of plant and equipment, estimated to realise $450,000, most other assets had negligible value. The entire contents of the company’s Wigram facility were controversially pulled from the Turners’ website and Trade Me hours before auctions closed last week after an offline bidder offered to buy the lot.

At the meeting, Grant said the liquidators were obliged to maximise returns for creditors, and ending the auction process was a tactical choice.

“How do we know we made the right decision? We don’t, because we don’t have access to the counterfactual. It was a commercial decision based on the feedback Peter [Drennan] had been getting around the auction.”

In any case, the purchase price was a “small fraction” of Emichrome’s debt, Grant said. The buyer and sum would not be disclosed until the transaction was complete.

Fiji wanted to build a medicinal cannabis hub in a leased building in Denarau, in anticipation of new medicinal cannabis legislation. Two people are pictured here visiting Medical Kiwi’s premises in Christchurch.

The auction dispute was just the latest chapter in the acrimonious saga of APP’s demise.

In 2021 it was denied an NZX sharemarket listing and then ran afoul of the Financial Markets Authority over claims it made during a capital raising on crowdfunding platform PledgeMe the year before. It was fined $250,000.

In 2022 it was admonished by its own auditor about improbable capital raising and revenue targets. In December, investors and former staff expressed disbelief that APP executive chairman Aldo Miccio, a former mayor of Nelson, pursued APP-related interests in the UK and Fiji in the weeks before and after the New Zealand company entered administration, including telling Fijian stakeholders a plan to recapitalise APP was being arranged.

At a fiery creditors meeting the same month, investors demanded answers from Miccio and founding director Peter Win about 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.

At the meeting this week, Drennan said the 2021 money did appear to be taken “off the table … [but] that was some four years ago. There’s nothing necessarily problematic about someone taking money off the table for a company they had received some investment in.”

On the more recent payments, he said: “While I can understand it’s quite galling for creditors to see directors are still paying themselves up to the date of administration, there is no blanket rule preventing director compensation before administration.

“We will be reviewing the money that went in and out of the company to confirm that none went anywhere that it shouldn't have.”

Miccio, Win and the APP board were excused from Monday’s watershed meeting. “We felt last time having them in attendance proved to be a bit of a distraction,” Drennan said.