17 Sep 2018

Mainzeal traded while 'dangling by a thread', court told

5:06 pm on 17 September 2018

A lawyer has told the High Court in Auckland that failed property company Mainzeal continued to trade while verging on collapse.

Dame Jenny Shipley

Dame Jenny Shipley (file). Photo: RNZ

The case against the former directors, who include former Prime Minister Dame Jenny Shipley, opened today.

Mainzeal was the country's third largest construction company when it collapsed in 2013, owing creditors $117 million.

Dame Jenny and former Brierleys chief executive Sir Paul Collins are among directors being sued by the company's liquidators for $75m.

Lawyer Mark O'Brien told the court that the company continued to trade while it was "dangling by a thread".

He said it was not profitable and was incurring losses while leaky building claims mounted.

Mr O'Brien said an undercapitalised balance sheet and systematic governance failures were the reasons behind the company's collapse.

"Liabilities significantly exceeded its assets from as early as 2008," he said.

Mr O'Brien said the company had been "dangling by a thread of shareholder support" just prior to going under, and the directors should have known.

The company's liquidators, Andrew Bethell and Brian Mayo Smith of BDO, allege the directors allowed the company to continue trading while insolvent for more than five years.

Dame Jenny has denied any wrongdoing and said any claim would be vigorously defended.

The trial is set down for six weeks.