High-flying Preet & Co Real Estate (PEL) and Preet & Co Rentals (PRL) have now gone into liquidation owing creditors at least $14 million.
PEL held the franchise rights for the Harcourts’ brand for south and east Auckland for the sales arm of the business. It had 10 branches with offices in Botany, Ellerslie, Otahuhu, Howick, Manukau (two sites), Pakuranga, Papatoetoe, Meadowlands and Manurewa.
Administrators — and now liquidators — Meltzer Mason were called in on November 22 “on appointment by a secured creditor” to allow the insolvency group to take control of the affairs to see if there was a way forward for “an otherwise successful business”.
Company administration aims to help a company repay debts in order to escape insolvency if possible, whereas liquidation is the process of selling all assets before dissolving the company completely.
A Meltzer Mason report to creditors says the sole director and shareholder of the group, Gurpreet Grewal, was referred to Meltzer Mason by a firm of accountants who acted for the shareholding trusts for the Harcourts group in New Zealand.
The report says anomalies were discovered in the trust accounts of the Preet companies around August/September and are being investigated by the Real Estate Agents Authority (REAA). For about a month prior to the appointment of Meltzer Mason, the administrators had some involvement while Mr Grewal worked with Harcourts and a secured creditor to see if a plan could achieve full repayment of all creditors. Ultimately, this did not occur and the administrators were brought in.
Mr Grewal tried to keep a lid on things assuring the administrators he was committed to paying all creditors, adding that once the appointment of Meltzer Mason became public, the business would be “rendered useless”, the report says.
The administrators say Preet & Co had traded relatively well but had expanded quickly. There was significant secured debt and the companies had significant funding requirements but were unable to secure financing. As a result of the REAA investigation, Mr Grewal had volunteered to relinquish his licence while investigations were undertaken.
“In the administrators’ assessment, the rapid expansion, coupled with potentially overvalued acquisitions and the high level of borrowing, led to working capital deficiencies,” the report says.
“It is relevant that this programme of growth was undertaken when the value of real estate in Auckland was rising annually at very high percentages.”
As to the companies’ financial accounts, draft figures for the year to March 31, 2017 record a $380,610 profit on turnover of $12.688 million for PEL and a net loss of $2232 on a turnover of $852,210 for PRL. Net assets were recorded on the balance sheets as $1.695m for PEL and net liabilities of $127,930 for PRL.
As at the date of appointment of Meltzer Mason, there were two secured creditors — Bank of New Zealand (first ranking) owed $10.179m and Harcourts Group (second ranking) for $1.2m.
Unsecured creditors are the Inland Revenue ($2.262m), known trade creditors – Preet & Co Real Estate ($859,749) and known creditors – Preet & Co Rentals ($20,817) for a total of $14,521,951 as at November 22, 2017.
The Times has attempted to contact Mr Grewal for comment.