After years of hold-ups and little to show for it other than a hole in the ground, financier Hanover had had enough and moved to put into receivership a €1bn scheme earmarked by colourful Kiwi developer Dave Henderson for a site beside the airport at Queenstown in New Zealand.
Deloitte was brought in as receiver because Henderson's company failed to make interest payments, causing a loan default, but it lacked planning experience so it called in Irish developer Nigel McKenna. It was reported locally that he would change the design and configuration of the plan for a site in an area called Five Mile.
McKenna was an obvious choice: a quantity surveyor, he was developing a €500m hotel and leisure complex at a former campsite down the road called Kawarau Falls Station and was also planning a near-€500m scheme at Flat Bush, near Auckland.
Since then, however, McKenna's fortunes, just like the global property market, appear to have taken a turn for the worse. The first phase of Kawarau Falls Station, which is partly completed, has been in receivership since May of last year. Two other phases are planned.
Documents lodged with the Companies Office in New Zealand in recent days by receiver KordaMentha, which have been seen by the Sunday Tribune, show that by November of last year the total amount owed to Bank of Scotland International (Australia) for the first phase had risen to about €90m. Another €1.75m was owed to unsecured creditors
"Based on the information currently available to us, it is unlikely that there will be any funds available for unsecured creditors," the report states. "The receivers are continuing to work with all parties involved in the development, including on-site management and consultants, to assess options for the company's assets. In the meantime, work continues on the development."
Those further works amounted to more than €30m in construction costs over the six months.
The report added that pre-sales to sell all of the stage-one properties in the development had been entered into by the group with various parties prior to the receivership. "The receivers continue to be in communication with these parties," it said.
Other phases in the development are also planned and McKenna has said the project is of "national importance" to New Zealand. It was reported that he had been in talks with the country's Superannuation Fund about investing in the project before to the receivers were appointed.
When the receivers were appointed McKenna stressed that no other companies in his Melview Group were affected.
McKenna is self-made. He emigrated to the southern hemisphere in 1987 and last year the New Zealand Business Review estimated he was worth about €60m. Brought up in Longford, he obtained a degree in construction economics and became a quantity surveyor. His Galway Tourism Investments is said to be the largest hotel owner/operator in New Zealand. McKenna's email address there did not work last week.
However, in December his Melview Featherston Street (MFS) vehicle went into receivership and liquidation. Fletcher Construction Company had been contracted to build the Holiday Inn at Featherston Street in Wellington but when the final payment for the construction contract was due, the contractor could not "recover the monies due and obtained judgment for NZ$1.7m against" McKenna's company, according to the liquidator's report. A deed of settlement was eventually signed, "giving Fletchers the power of attorney to appoint a liquidator in the event of default by the company". MFS did not meet the "agreed payment schedule prescribed in the deed" and the liquidators were brought in. In addition, Structured Finance (NZ) has appointed a receiver to the company.
Most of the rooms in the Holiday Inn were bought by investors and last month they said they were owed "substantial arrears" by McKenna's Galway Tourism Investment Group which manages the hotel suites for investors and is responsible for paying rent to them. Galway told the New Zealand Herald at the time that it is working with its funders on an arrears proposal.
Meanwhile, the €450m Flat Bush development near Auckland is now facing delays because of differences over the retail development that should be constructed there, according to local reports. Earlier this month, the city council's property company decided that the style and location of the retail area proposed did not comply with its vision. The council's company, dubbed Tomorrow's Manukau Properties (TMP), has given Melview Developments the option to appeal that decision.
"The ball is in their court and we're a bit disappointed because the time line has slipped," TMP chief executive Mike Higgins told the Howick and Pakuranga Times, adding that Melview "continue to assure us they are capable of meeting their final obligation".
Melview will build and sell the commercial properties developed on the 50-acre site, which was acquired by the council in 1996. A development deal between the two sides is already in place and planning, earthworks and road construction have already completed. The plan was for the site to house up to 40,000 people, with residential units, offices and shops all being built there. How long it takes before that plan comes to fruition is anybody's guess.