Mainzeal directors chased for double the compensation over collapse


The liquidators of Mainzeal have launched a cross appeal that could result in the directors - including former Prime Minister Dame Jenny Shipley - having to pay double the compensation.  

In February, Justice Francis Cooke ruled four former directors of Mainzeal should pay $36 million - one third of the total owed - after it was found the company had traded recklessly. 

Former directors Dame Jenny, Peter Gomm and Clive Tilby  were liable for $6 million each. 

A fourth director, Richard Yan, was found by the court to have induced the other directors to breach their duties, including making misleading representations to them. The decision holds him liable for the full $36 million.

Mainzeal went into liquidation in early 2013, owing unsecured creditors like tradies, sub-contractors and employees about $110 million.

The former directors lodged an appeal against the ruling last month, which was countered by a cross appeal by liquidators Andrew Bethell and Brian Mayo-Smith.

In the cross appeal the liquidators say the court "erred in applying a discount of two-thirds to the starting point for compensation of $110 million and limiting the Directors' liability to the respondents to the sum of only $6 million each."

They also state the court was wrong to order Dame Jenny's compensation should be the same as Gomm and Tilby's given as her role as chairperson meant "her culpability was significantly greater than the culpability of Messrs Gomm and Tilby."

The liquidators want the former directors to be liable for two thirds - $73 million -  instead of one third of the total amount. 

The appeals and cross-appeal are expected to be heard in the Court of Appeal in April.