“The situation is complex and of such a scale that immediate intervention is required to prevent broader harm.

“Statutory management is the option of last resort used to deal with complex corporate failure where ordinary insolvency law is inadequate. It is intended to protect investors and creditors from further losses and to enable the orderly administration of a company’s affairs.”

Bayly said Du Val Group was made up of about 70 entities, including 46 subsidiaries, and 20 special purpose vehicle limited partnerships. There were between 120–150 investors, home buyers and commercial lenders “tangled up and given the number people involved it’s important we ensure the process is orderly and fair”.

“By placing Du Val into statutory management, all current insolvency processes are suspended, enabling the affairs to be dealt with by one team of people, rather than multiple insolvency processes unfolding simultaneously.

“The decision to put the companies into statutory management follows a recommendation by the FMA. The FMA made its recommendation based on its ongoing investigations and following a report from the court-appointed interim receivers.

“Following Cabinet’s approval, the Governor-General has made an Order in Council. This decision is effective from today.”

The order applies to four core Du Val Corporations and 20 associated persons – all limited partnerships – along with 46 subsidiaries. One subsidiary is excluded as it is 50% owned by a third party and operates independently of the Du Val Group.

The Government appointed John Fisk, Stephen White and Lara Bennett of PwC as statutory managers. This follows their recent appointment by the High Court as interim receivers for the Du Val Group.

The FMA also issued a statement in reaction to the Government’s move.

“The Corporations Act provides remedies to deal with complex corporate failures and is most appropriate where a company has, or may have been operating fraudulently or recklessly or, alternatively, where the ordinary law is inadequate to deal with an orderly wind up of the companies. In this case, the FMA considers both provisions apply,” it said.

The FMA’s recommendation was based on its own investigations and a report from the court-appointed interim receivers, PwC New Zealand. The report is currently subject to court orders restricting its publication.

The FMA considers the conditions under the Corporations Act have been met, and is satisfied statutory management is the most appropriate available option for each of the Du Val Group corporations to which it has been applied, for the purpose of:

The FMA has ongoing investigations into the Du Val Group.

Du Val investors and creditors with questions on the statutory management process should contact PwC New Zealand at nz_duval@pwc.com.

Anne Gibson has been the Herald’s property editor for 24 years, written books and covered property extensively here and overseas.