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Mainzeal Directors ordered to pay in excess of $50m

The Supreme Court decision released today has ordered former Mainzeal directors liable to pay $39.8m plus interest at 5% from the date of liquidation (Feb 2013), and costs in compensation to the creditors and subcontractors who were left $111m out of pocket when the company collapsed in 2013.

Compensation was ordered against Richard Yan in full, with the liability of Dame Jenny Shipley, Clive Tilby and Peter Gomm capped at $6.6m plus an estimated $3m interest each.

Mainzeal liquidator Andrew McKay of BDO said “On behalf of the creditors, we welcome the Supreme Court’s decision that confirms the directors breached their duties while allowing the company to trade while insolvent over a long period of time. This is a landmark judgment which reinforces the obligations directors have to fulfil their duties diligently and responsibly.

“The Mainzeal directors knowingly, and recklessly exposed creditors to illegitimate risk with their trading while insolvent and ‘rob Peter to pay Paul’ strategies. The creditors have waited a long time for this decision which brings to a close over 8 years of prolonged court proceedings, including trials in the High Court, Court of Appeal and Supreme Court.

“At every stage of this long process, the defendants and their insurance company, QBE, have denied wrongdoing which has only delayed justice for the creditors. Given the clear facts of the case, established in each of the trials, it is disappointing that the Mainzeal directors have failed to take any responsibility for their actions which illegitimately used creditors’ money and put them at risk, losing over $111m.

“We would like to thank the legal team and litigation funder, LPF Group. Pursuing a case of this size and duration, with costs of nearly $10m, right through to the Supreme Court would not have been possible without litigation funding.

“We are committed to recovering the damages awarded by the Court including in part from the insurers, enforcement action against the Directors to ensure creditors receive compensation for their financial losses, said Mr McKay. “We appreciate that this has been a challenging time for many creditors, and we hope that the Supreme Court’s ruling provides them with a sense of justice being served.”


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