Building company Devon Construction, operating in the Canterbury region, has been placed into liquidation.

The liquidation process started last week, after a special resolution by the company’s shareholders, as outlined in a report released by liquidator Brenton Hunt of Insolvency Matters Limited.

The  report revealed that Devon Construction, incorporated in 2008, ceased trading in September 2024. A slowdown in construction activity in the region rendered the business financially unsustainable.

One of the company’s directors managed to complete remaining projects before closing the business, terminating staff, and shutting down operations.

According to the report, Devon Construction was insolvent, with secured creditors owed approximately $300,000 and unsecured creditors facing a shortfall of around $800,000.

The Inland Revenue Department is also listed as a preferential creditor, with an estimated $150,000 owed in GST and PAYE.

At the time of liquidation, the company’s bank account was in overdraft, and its assets—primarily motor vehicles and construction equipment—are expected to be sold to recover some funds for creditors.

However, the report suggests that there may be insufficient assets to cover all debts, and it is “looking unlikely” that unsecured creditors will receive any payment.

The report highlighted that investigations will focus on whether any of the directors breached the Companies Act 1993, which requires directors to avoid actions that would pose a substantial risk of loss to creditors.

Should any breaches be found, the liquidator may apply to the High Court to hold the directors personally liable for the company’s debts.

Secured creditors, including major suppliers such as Kiwibank Ltd and Carters Building Pro, will be given priority in the distribution of any recovered funds.

Unsecured creditors, including suppliers and contractors such as ACC and McAlpines Mitre 10 Mega, are estimated to be owed around $800,000.

The liquidator has fixed 7 November 2024 as the deadline for creditors to submit their claims.

The liquidator’s report acknowledged that one of the directors acted responsibly by attempting to finalise projects and wind down operations before the company ceased trading.

Nonetheless, the liquidator will investigate whether the directors fulfilled their obligations under the Companies Act, which requires maintaining proper financial records and avoiding any actions that could harm creditors.