Sacred Hill, which collapsed in 2021 owing $100m and saw its business operations sold by recievers, is the subject of complaints to the Registrar of Companies. Photo / Warren Buckland
Sacred Hill, which collapsed in 2021 owing $100m and saw its business operations sold by recievers, is the subject of complaints to the Registrar of Companies. Photo / Warren Buckland
Receivers overseeing failed wine group Sacred Hill, where creditors are likely to be left $72m short, have flagged concerns with authorities about the operation of the business prior to its collapse.
Receivers Rees Logan and Andrew McKay, of BDO, acting for Westpac, were appointed to four companies - Sacred HillVineyards, Sacred Hill Marlborough Vineyards, Sacred Hill Family Vineyards and Sacred Hill Global - in May 2021.
The latest report from receivers notes: “Our investigations into matters that occurred prior to receivership have identified matters that the receivers have reported to the relevant authorities.”
Contacted by the Herald, Logan said his report provided as much information as he was able to offer and gave only a “no comment” in response to further questions about the referral.
Vanessa Cook, manager of integrity and enforcement at the Ministry of Business, Innovation and Employment, confirmed the Registrar of Companies had received a complaint about Sacred Hill.
She said MBIE did not comment on the status of active investigations as that could prejudice ongoing enquiries.
“However, should breaches of the provisions of the Companies Act 1993 be identified, enforcement action will be considered in accordance with the Companies Office enforcement policy guidelines,” Cook said.
In the year prior to its collapse the Sacred Hill group had only a sole director, majority-owner and managing director David Mason.
Two other directors - then-chief executive Richard Foddy, and non-executive director and Hong Kong-based Gavin Jones - had both resigned from the board in April and May of 2020.
Mason did not respond to email or phone messages sent this week by the Herald.
David Mason was the sole director of collapsed Sacred Hill Vineyards, based in Hawke's Bay, and owned about 65 per cent of its shares. Photo / NZME
The first report prepared by receivers reported Mason said Sacred Hill had been in trouble since 2019 after it was found “the company’s level of inventory was materially overstated in its audited accounts”.
Its significant Westpac banking facility was secured against assets - including the overstated inventory - leading to a failed effort to sell off its Hawke’s Bay operations to reduce debt.
“Other factors including a poor 2021 vintage, a high NZD/USD exchange rate, and poor financial performance meant that Sacred Hill Group was reliant on ongoing support of its bank to continue trading,” the receivers’ report said.
Westpac’s patience with defaults ran out in May 2021 with the appointment of BDO.
The group’s main asset were sold by receivers for $48.7m.
Wine sellers Vinlink picked up the Marlborough operations, while the Poulter family - whose business chiefly imports fruit for the supermarket trade - bought the Hawke’s Bay business. The Sacred Hill brand continues to trade under its new ownership.
Mason unsuccessfully sought to prevent the breakup by receivers.
Recent receivers reports show Westpac, despite having secured status and being entitled to the lion’s share of business sale proceeds, is still owed $11.2m of the $52.4m due at appointment two years ago.
There remains little left to satisfy the remaining bank debt, let alone the long list of other creditors owed tens of millions of dollars more.
“Based on a substantial shortfall to our appointor and preferential creditors we do not believe there will be any funds available to distribute to unsecured creditors,” receivers said.
Consolidated creditor totals across the four companies in the group show: Non-Westpac secured creditors are still short $11.9m; Inland Revenue is owed $327,000; NZ Customs $2.3m in unpaid excise taxes; and a pool of dozens of unsecured creditors are due $9.4m.
Excluding intra-group related party debts, receivers reports suggest the shortfall to outside creditors at this late stage is $39.3m.
Related-party creditors, unsecured loans to the collapsed companies with shareholdings in common, are owed a further $32.8m and warned they were likely to receive nothing.
Sacred Hill, founded in 1986 by David Mason and his brother Mark, had been a major player in the New Zealand wine industry, producing well-regarded chardonnay and red wines in Hawke’s Bay and bulk sauvignon blanc in Marlborough.
Sacred Hill is best known for its flagship Riflemans Chardonnay, Deerstalker Syrah, Brokenstone Merlot and Helmsman Cabernet Sauvignon.
The wine industry has weathered tough times in recent years. The same month Sacred Hill failed, receivers were appointed to fellow industry giant Villa Maria.
Matt Nippert is an Auckland-based investigations reporter covering white-collar and transnational crimes and the intersection of politics and business. He has won more than a dozen awards for his journalism - including twice being named Reporter of the Year - and joined the Herald in 2014 after having spent the decade prior reporting from business newspapers and national magazines.
