Du Val collapse: Questions loom over loans, debt to IRD

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Around 70 entities in the Du Val Group, founded by Kenyon and Charlotte Clarke, are in statutory management. Photo / Supplied
Liquidation of an entity involved in a completed Du Val townhouse development in Auckland provides a glimpse into the complexity of the statutory management of the wider group.

Tui Terraces Limited Partnership was
established in April 2019 to carry out a development in Papatoetoe known as Rata Terraces. The 101-unit development was sold in two stages, including off-plan purchases, and construction was completed in 2021.

In October 2023 the limited partner, Du Val New Homes LP, resolved to terminate the Tui partnership and liquidators from BDO were appointed that same month.
What began as an orderly wind-up now appears complicated by the statutory management of dozens of Du Val Group entities and the subsequent status of related party receivables due to Tui Terraces LP.
The related party term loans – recorded at $6.7 million in liquidation reports – are due for repayment in December 2024 and December 2025. The funds are required to satisfy Tui’s liabilities, consisting mainly of $4.59m claimed by the Inland Revenue.
In April the BDO liquidators of Tui Terraces were confident the loans would be repaid with the proceeds sufficient to clear known liabilities of Tui Terraces.
“The Liquidators have contacted the related party debtors and await payment of the loan receivables when due,” BDO liquidators Iain Shephard and Jessica Kellow said in their second report dated April 3.
However, it is unclear what impact the statutory management of other Du Val entities, including Du Val New Homes LP, will have on that assumption.
John Fisk, Stephen White and Lara Bennett of PwC New Zealand were appointed statutory managers of around 70 Du Val entities last Wednesday. That appointment replaces interim receivership after the Financial Markets Authority obtained a High Court order on August 2.
Fisk last week said at least $250m was owed to creditors – including 120 investors – based on an early estimate of company records.
The process, last used in 2010 with entities associated with the late Allan Hubbard, raises many questions for creditors.
Untangling the labyrinth of Du Val companies, limited partnerships and funding lines will be a major task.
The wind-up of Tui Terraces itself raises fresh questions in light of statutory management, including the source of funding for the related party loans and the identity of that related party.
BDO’s Shephard and Kellow did not return calls on the matter.
Tui Terraces does not appear to be part of statutory management.
Its general partner – Du Val GP 2 Limited – was deregistered from the Companies Office on June 20 this year, six weeks before the FMA swooped on Du Val Group and its founders Kenyon and Charlotte Clarke.
Commenting on the appointment of statutory managers, Commerce and Consumer Affairs Minister Andrew Bayly last week told the Herald the situation was complex and “of such a scale that immediate intervention is required to prevent broader harm.”
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.
Du Val Property Group built hundreds of apartments, mainly in South Auckland, raising money from investors to partly fund schemes.
Charlotte and Kenyon Clarke were active on social media, documenting their business exploits and at times lavish lifestyle on Instagram.
They also made a reality show that has never been screened.
In October 2021, the FMA told Du Val to remove advertising for a mortgage fund that gave the impression it was low risk.
Last March, the Herald reported how the FMA had again warned Du Val about misleading and deceptive statements to investors.
Duncan Bridgeman is the managing editor of NZME Business News, which includes the Business Herald and BusinessDesk.
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