Marine engineering company goes bust owing more than $3 million

Colin Smith

Nelson Reliance Engineering Ltd, owned by Nevil Basalaj (pictured), owes more than $3 million to around 200 creditors, a liquidators' report shows.

Nelson Reliance Engineering, once a key player in the region's marine engineering industry, has gone into liquidation, owing more than $3 million.

The boat-building business, owned by Nevil Basalaj, owed around 200 creditors a total of $3,195,316.50, the liquidators' first report showed.

That included a claim by the Inland Revenue Department for just over $405,000 in unpaid GST, Child Support Deductions, Income Tax, Kiwisaver Deductions, Student Loan Deductions and PAYE.

Marion van Dijk

Nevil Basalaj, owner of boat-building company, Nelson Reliance Engineering, which has gone into liquidation owing more than $3 million.

Company records showed the boat yard operator had around $220,000 in known assets.

Twenty-eight staff were employed by the company on the date of liquidation in March, including Basalaj and his partner Amber Basalaj, with 26 employees owed more than $102,000 in outstanding wages and/or holiday pay.

Staff would be the first to be paid back any money retrieved from the business, followed by IRD, and then creditors with security interests, who were owed more than $1 million.

Around 180 unsecured creditors were owed $1,562,638.03 in total.

One of them, Nelson company, Coldstore Construction Ltd, said Reliance Engineering owed them "a significant amount".

The debt was extremely frustrating and disappointing, managing director Chris Millson said.

"Any unpaid accounts or debt does have quite a significant impact, with regards to having to cover the hole that's been left not only in the material supply, but the fact that we've paid out labour, paid out all of our costs and paid tax on that.

"Businesses in Nelson especially work on a level of trust and a level of cooperation, and it's very, very rare for that trust, cooperation and understanding to be breached."

Crabb Electrical Ltd, another unsecured creditor, wasn't optimistic about getting back money owed by Nelson Reliance Engineering.

While only amounting to a few hundred dollars, manager Brad Crabb was frustrated the company didn't pay for his business' services.

"I've rung them, I've emailed them, and it's just fallen on deaf ears ... they shouldn't really be allowed to carry on trading in business in that fashion."

Liquidator Rhys Cain from Ernst and Young in Christchurch said a number of creditors had contacted the liquidators directly with information about the company, but he wouldn't be drawn on the details.

"It is standard practice for every liquidation for the liquidator to investigate allegations of insolvent trading and whether or not the directors have breached their director's duty in allowing that to occur.

"It certainly will be the subject of our investigation."

He strongly urged any creditors with concerns to put their concerns in writing to the liquidator.

"Anybody who is a creditor of the company that has got information that they believe will assist the liquidators, we really do encourage them to let us know so that we can look into it."

Nelson Reliance Engineering director Nevil Basalaj told Stuff on Thursday he would respond by email, but failed to reply to messages.

But in the liquidators' first report, Basalaj attributed the company's failure to a number of events, including a "significant bad debt incurred by a related party". That led to legal action that was unsuccessful, he said.

Nelson Reliance Engineering was operating under an umbrella company, Challenge Marine, also run by Basalaj.

He owns another company, Fluid Power Solutions, under the Challenge New Zealand umbrella, and two other companies; Basalaj Properties and Basalaj Racing.