Criterion Group Ltd's receiver says HSBC is likely to suffer a "significant shortfall" on the NZ$8.6 million it was owed by the furniture manufacturer when the bank pulled the plug, tipping the company into receivership on January 31.
In their first report KordaMentha's Grant Graham and Brendon Gibson say they marketed the group's New Zealand and Australian business for sale on both an as is and going concern basis. However, although a number of parties initially showed interest, no one has made an offer for the business as it is.
"Accordingly we have proceeded to sell the plant by auction. We have continued to sell inventory through existing channels. Other initiatives to realise inventory will also be undertaken," Graham and Gibson say.
They say preferential creditors include staff owed NZ$120,000 and the Inland Revenue Department owed NZ$225,000.
"At present we expect a significant shortfall to the first ranking secured creditor (HSBC) and no funds for preferential claimants. We do not expect any funds to be available to any other class of creditor."
Criterion Group Ltd is a holding company of a wider group that manufactured, imported and traded ranges of flat pack furniture for the New Zealand and Australian office and entertainment sectors from its East Tamaki factory.
The receiver's report shows Criterion, including its subsidiaries, with an equity deficit of NZ$350,000. Aside from the HSBC debt, its liabilities include NZ$4.8 million owed to creditors and accruals and shareholder loans of NZ$7.1 million.
"The group had been trading at a loss and the directors were taking steps (prior to receivership) in relation to a trade sale of the business," Graham and Gibson say.
At the time of the receivership Radio New Zealand reported Criterion had been up for sale for several months, but there had been a serious decline in trading over recent months. its Auckland factory has the capacity to make 500,000 pieces of furniture per year and sold to customers in the United States, Japan, Hong Kong, Europe, Australia and New Zealand.