Queenstown's mayor is being taken to court by liquidators for a building company.
Ernst and Young's Rhys Cain and Rees Logan have filed legal proceedings against Jim Boult and Stonewood Homes' director Brent Mettrick in the Christchurch High Court.
Stonewood Homes went into receivership in early 2016 owing more than $25 million to creditors.
Mr Boult, who was elected Queenstown Lakes District Council mayor in October 2016, was a non-shareholding director of the company between August 2014 and February 2016.
Attempts to speak with Mr Boult today were unsuccessful. His executive assistant told RNZ he was "too tied up to talk" about the matter and instead provided an emailed statement titled "Liquidator's claims strongly rejected".
"Jim Boult rejects the claim(s) made by the liquidator for Stonewood Homes and confirms he will be vigorously defending any suggestions he did not fulfil his duties as a director," the statement said.
"He was a non-shareholding director of the company for 18 months from August 2014 to February 2016 when he resigned.
"Mr Boult says he became involved with the business to help the owner address a number of issues facing the company following the Canterbury earthquakes. He resigned when it became apparent those issues could not be resolved.
"I have provided in-depth information to the liquidator that clearly demonstrates I fulfilled my obligations and duties as a director. I am confident any investigation will support this."
A spokeswoman for Mr Mettrick, at his new employer Green Homes New Zealand, said Mr Mettrick was making no comment.
The liquidators provided a short statement regarding the proceedings.
"The matter is now before the court and as such the liquidators have no further comment to make at this time."
In the liquidators most recent report filed with the Companies Office - which covered the period from 22 October 2017 to 21 April, 2018 - they said their "we will not be disclosing the detail of our investigation report at this stage as we do not wish to prejudice any future actions".
Receivership of the company group was completed in March with $5.9m paid to ASB - the secured creditor - and all staff and Inland Revenue Department claims settled.
However, more than $10m of unsecured creditors remained as well as a significant shortfall to secured creditors.
In 2016 it was revealed an investigation into the failed company was underway and Mr Boult's involvement in the company would form part of it.
At the time Mr Boult told media he welcomed the investigation and had carried out his duties as director with "with care and diligence".
He had been involved with a group which looked at a potential buy-out of Stonewood Homes, but it did not eventuate. The Chow brothers bought some of the assets of the group.
Mr Boult was previously the chief executive of Christchurch International Airport.