Liquidators of failed construction company Mainzeal have applied to bankrupt the company’s ultimate boss – unless he hands over $18 million for creditors in the next five weeks.
The executive in question is Richard Yan, who came to New Zealand in the 1980s as a penniless young Chinese student and ended up a multi-millionaire, with properties and business assets in New Zealand and Shanghai.
Now he could end up back where he started, penniless, in New Zealand at least.
Mainzeal liquidators BDO say Yan has refused to stump up with the money he was ordered to pay in a recent court case. Now they hope that by bankrupting him, they can use properties he owns here to pay creditors.
“After numerous attempts to get Richard Yan to pay the $18 million in damages he owes to Mainzeal and its creditors, liquidators have been forced to get the High Court to order him to pay the amount owing within 25 working days, or face bankruptcy,” BDO says.
The sorry saga began when Yan’s China-based company, Richina, short for ‘Rich China’, bought New Zealand company Mainzeal. Richina then borrowed millions of dollars from Mainzeal to buy companies in China.
Trouble is, when Mainzeal got into financial trouble, Richina didn’t give the money back.
And when Mainzeal went into liquidation in early 2013, creditors, many of them tradies working on Mainzeal projects, ended up owed $110 million
Six years and various legal processes later, they haven’t seen the money.
In a judgment earlier this year, four Mainzeal directors, including Richard Yan and former Prime Minister Dame Jenny Shipley, were ordered to pay $36 million to creditors. Yan’s share is $18 million. Although all sides are appealing the decision, liquidators BDO have asked for the money to be paid, or at least be available.
“Mr Yan has a legal obligation to pay or secure $18 million, being his share,” liquidator Andrew Bethell says. “We have not received this money nor has Mr Yan acknowledged that he intends to pay. Therefore we have been left with no choice but to file bankruptcy proceedings against him to recover the money.”
One of the problems for the liquidator is Yan appears to be living in Shanghai.
However he has New Zealand assets which could potentially be seized and sold if he was made bankrupt.
These include: the sprawling Campbell Park country estate near Oamaru; a patch of prime Auckland waterfront real estate at the end of Lucerne Road, Remuera; and a house in Margot Street, Newmarket, close to private girls’ school Diocesan.
The two Auckland properties could be worth up to $15 million; the Otago estate – which was used in The Lion, The Witch and The Wardrobe and Lord of the Rings movies, was marketed for almost $4 million in 2016.
That, coincidentally, adds up to just over $18 million.
According to Yan’s own numbers, revealed during the Mainzeal court case, his stake in Richina in China is possibly worth over $1.5 billion, though getting hold of any of that from New Zealand is unlikely.
Andrew Bethell says BDO is looking to get the total damages increased from $36 million to $73 million, and to have Yan and Shipley responsible for a higher proportion “because of the powerful positions they held”.
“While we wait for the Court of Appeal to hear these arguments, Mr Yan is obligated to pay or secure his share of the damages awarded by the High Court. It is a significant sum of money and we want to make sure it is available to the creditors once the legal process has been completed.”
The $18 million owed by Shipley and the other two New Zealand directors has been secured by insurance company QBE under directors’ liability cover.
The appeals and cross-appeal are expected to be heard early next year.