Financial challenges following a failed shipment of cattle to China have put Genetic Development Exports New Zealand into liquidation.
The livestock ship MV Al Kuwait never came to NZ in early May to collect the 12,000 head of cattle that were waiting on two pre-export isolation farms.
Total direct costs and losses added up to more than $5 million for the failed shipment.
The liquidation ruling made by the High Court in Hamilton on September 5 came after the Hamilton-based livestock exporter ran into financial strife with a large creditor pool that includes farmers, trucking companies and livestock firms.
Up to 50 farmers have been chasing payment for cattle they contracted to a subsequent shipment that left from New Plymouth later in May.
Creditors are collectively owed millions with about $2.7m alone owed to two trucking companies.
The liquidation application was made by Te Puke-based Armer Farms (NI) Ltd; PwC has been appointed liquidator.
In a written statement signed by the partnership’s two NZ directors, David Hayman and David McEwen, Genetic Development (NZ) Exports Limited Partnership (GDEx) says management had exhausted all possibilities to raise the funds to manage the costs and claims that have arisen as the result of a shipment that went tragically wrong.
“We regret to advise that GDEx (an entity of GDNZ Management Ltd) was placed into liquidation and is now under the management of liquidators.
“This breakdown event for the vessel (Al Kuwait in April), in a period of shipyard congestion and supply chain disruption, has dealt a fatal blow to GDEX.
“We were left with the sad and unavoidable option to agree that liquidation will provide the earliest opportunity for resolution for farmers and other debtors.”
GDNZ Management Ltd was incorporated on October 9, 2020 with the ultimate holding company being China-based HASLIC Limited, listed as a private company on July 7, 2020.
HASLIC holds 60% of the shareholding and GDNZ 40%.
The five listed directors are Hayman and McEwen and three China-based directors, Jin Ding, Sicong Wang and Kangyun Yang.
PwC liquidator Malcolm Hollis said it is an “unusual” situation with the entity in liquidation being a partnership, as part of a general partnership.
“The NZ exporting-of-livestock arm of the limited partnership is the entity in liquidation.”
But as complex as it is, Hollis said the liquidation process is the same as that of a company.
“Effectively we will do two things: realise the assets for the benefits of the creditors and conduct an investigative process to determine if there is any potential claim against directors, shareholders or in fact even creditors.
“We will be looking back on processes, including the history of processes and business to understand what’s gone on.
“The reality is as far as I can tell is there are no physical assets.”
Hollis cited a claim against the shipping company that will be explored.
“Finding out what is the status of that claim is one of the very first things to do and see what could be achieved from realisation of that claim as one of the major recovery areas.
“Through records and all available information, we need to determine why this partnership has got into this place that it has.
“We need to know where the money (sale of cattle) came from and where it went to.”
As far as he knows at this stage, Hollis said all creditors rank equal as unsecured creditors.
“The liquidator can make void any payments if they are found to have happened out of a due process,” Hollis said.
A creditors’ meeting will be called in the next four to six weeks to discuss the situation and potentially report findings.
Creditors have until October 14 to make their claims and to establish any priority to distributions that may become available.
To make contact with the liquidator email to: nz_gd_exports@pwc.com or phone PwC on (07) 838 3838.
In the meantime, Australian-based exporter Purcell Exports has picked up the GDNZ contract in China.
Managing director Patrick Purcell said his company facilitated two successful export shipments from NZ in 2014 so is not new to business in NZ.
“The opportunity was there to pick up the client in China, there were cattle to go, I had some relationships here, but I have used some of the GDNZ staff because it made sense and is cost-effective to take on the local personnel and expertise.
“Going forward I will take it shipment by shipment.”
A consignment of about 4000 cattle has been tagged to go into pre-export isolation in a couple of weeks with the shipment due on the water later in October.
