Warkworth Holdings, the owner of a key piece of real estate earmarked for greenfield growth in Warkworth, has been put into liquidation owing $47 million.
The company’s only real asset is the 19-hectare parcel of land on Falls Road, known as Stubbs Farm
The liquidation followed a successful application to the High Court by creditor and shareholder, Warkworth Retail, last month. The company’s major shareholder, Foundation Developments, supported the application.
Warkworth Holdings directors are Andrew Guest, Todd Strathdee, Kerry Hitchcock and Marcus Jacobson. The third shareholder is Arena Global, which Mr Strathdee is also associated with.
Warkworth Retail and Arena funded Warkworth Holdings’ purchase of the land.
Judge Ian Gault accepted a ‘without notice’ application for liquidation after hearing that that there were serious concerns about some dealings on behalf of Warkworth Holdings, including in relation to its shares and its dealings with The Neighbourhood Middle Hill, also controlled by Mr Strathdee and Mr Guest.
He said he was satisfied that it was expedient for the purpose of maintaining the value of the assets owned and managed by Warkworth holdings to appoint an interim liquidator.
Although the company was already in receivership, Justice Gault said an interim liquidator with a wider remit might take steps that the receivers would not necessarily take, including to investigate the disputed dealings. He said such steps might go further to maximise the value of the company assets. In that sense, the interests of creditors might be safeguarded.
August sale resolution
The court heard that in early August, Warkworth Holdings directors resolved to sell the land to a company called The Neighbourhood Stubbs Farm for $42 million, which is ultimately owned by Mr Strathdee, and Mr Strathdee and Mr Guest are its directors.
The court was told the land was said to be worth in excess of that figure and was the subject of a conditional offer to purchase for $50 million later in the month.
Warkworth Holdings directors then resolved to issue a buy-back notice under the shareholders agreement to require Warkworth Retail to transfer its shares in Warkworth Holdings for nothing, on the basis that there were changes to the directors or shareholders of Warkworth Retail. At the time, Mr Guest was also a director of Warkworth Retail, but the buy-back notice was not presented to the company’s board or shareholders. Mr Guest also subsequently signed a transfer of Warkworth Retail’s shares to Warkworth Holdings.
Around August 20, Arena issued a notice to Foundation Developments requiring it to transfer 10,000 shares in Warkworth Holdings to Arena for nothing.
But on August 22, the directors of Foundation resolved not to approve the sale of the land to Neighbourhood Stubbs Farm.
The next day, using the buy-back notice, Warkworth Holdings cancelled Warkworth Retail’s 30,000 shares in Warkworth Holdings. The move would have created a deadlock by reducing the number of shareholders in Warkworth Holdings to two.
Warkworth Retail claimed that the buy-back notice and the purported cancellation of its shares were invalid and done for an improper purpose. It also argued that the board of Warkworth Holdings had not been acting in the best interests of the company or its shareholders.
Lawyer Bob Hollyman QC, for Warkworth Retail, said there were serious and obvious concerns about the validity of the recent transactions that were entered into by Warkworth Holdings prior to receivership. This included the granting of a valuable easement and a cooperation agreement between Warkworth Holdings and The Neighbourhood Middle Hill, and the failed attempt to sell the land to The Neighbourhood Stubbs Farm.
Opposing the liquidation application on behalf of the receivers, lawyer Sean Gollin said that given that receivers were in place, an interim liquidator was not necessary to maintain the value of the assets. He said the directors remained in place technically, but their authority had been supplanted by the receivers.
Lawyer James Caird, for Arena, said that Arena did not accept a number of factual matters raised by Warkworth Retail, but was not in a position to deal with them on this application and questioned whether they could be determined in a liquidation proceeding. He endorsed Mr Gollin’s submission that the directors had minimal powers now that receivers had been appointed.
However, the Court appointed Waterstone Insolvency as interim liquidator and its first report was due on October 11.
Stubbs farm was part of a successful plan change application in 2019, which saw it rezoned from future urban to a mix of residential and commercial.