A trial is underway of former Mainzeal directors, including Dame Jenny Shipley, with liquidators seeking to recover $75 million for the losses they suffered.
The collapse of the construction company in 2013 was one of the largest in New Zealand history, resulting in losses to unsecured creditors of more than $115 million.
The liquidators allege the directors, including Shipley, breached their director duties and recklessly allowed the company to trade while it was facing serious financial problems.
Lawyer for the plaintiff Mark O'Brien QC began his opening statements on Monday, saying the company's liabilities exceeded its assets from 2008 and matters were worsened by poor trading performances and increasing leaky building liabilities.
He reminded the court that the collapse of Mainzeal was the catalyst for law change in the industry to ban the use of subcontractors' retentions as a source of working capital.
He told the court the key issue in the case is whether the directors could rely on non-binding expressions of support from shareholders.
"This company was left dangling by a thread of shareholder support. They were left extremely vulnerable to any adverse event that happened... which it did."
Prior to its collapse, Mainzeal had hundreds of employees and an annual turnover of $300-$400 million.
The trial is being heard in the High Court at Auckland and is expected to run for six to eight weeks.