property developer Du Val

PHOTO: Kenyon Clarke. FILE

Receivers overseeing the collapsed Auckland property firm Du Val Group have raised serious concerns regarding irregular accounting practices, questionable asset valuations, and related party transactions. These issues prompted the group to be placed under statutory management last month.

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A redacted report from PwC, released under High Court orders, indicates that further investigations are required into several aspects of the group’s property and investment operations. According to the report, “irregular accounting entries” may have created illegitimate assets or insufficiently supported valuations.

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One key concern was a $15 million intellectual property transaction involving a trust managed by Du Val’s founders, Kenyon and Charlotte Clarke, later reduced to $5.5m. The report calls for a thorough review of this deal, as financial records in Xero were unavailable to verify the associated funds flow.

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Additionally, internal valuations between $306 million and $431 million, presented to investors to convert individual investments into Du Val Property Group shares, lacked independent external verification.

The Du Val Group, which was placed into receivership at the request of the Financial Markets Authority (FMA), faces a financial shortfall as high as $250 million, according to receiver John Fisk. The complexity and magnitude of the group’s financial liabilities led the FMA to recommend statutory management to prevent further harm.

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With four core corporations, 20 associated limited partnerships, and 46 subsidiaries, the group’s financial mismanagement affected around 120 wholesale investors. The PwC receivers emphasized that statutory management would help provide stability and allow work to proceed on Du Val’s active construction projects.

SOURCE: RNZ