Stonewood saga for investors

The purchase of the troubled Stonewood Homes by Inno Capital, which is part-owned by the infamous Chow brothers, hit the news this week.

Christchurch-based Stonewood Homes, which is one of the country’s biggest house building companies, went into receivership in late February owing creditors, including sub-contractors, about $15 million and leaving 110 houses uncompleted.

While the receivership included Stonewood New Zealand Ltd – the master franchisor of the Stonewood Group and Stonewood’s Christchurch franchisee, it did not affect any of the other independently owned Stonewood franchises.

At the time, Registered Master Builders Association (RMBA) said that all Stonewood Christchurch house owners had Master Build Guarantees, which meant all of their houses would be completed.

There was confusion around what would happen to Stonewood’s unsecured creditors and – despite the purchase – that confusion remains.

However, Canterbury Property Investors Association president Lewis Donaldson said that he has not heard of any property investors who have been affected by Stonewood’s receivership.

NZ Property Investor Federation executive officer Andrew King also said he did not know of any property investors affected by Stonewood’s collapse.

In a statement, Inno Capital director Clint Webber said they are committed to turning Stonewood around and regaining customer and supplier trust.

The purchase has already saved the jobs of the remaining 44 Stonewood employees, he said.

“While we still have quite a process to work through with the receivers, our next step will be to engage urgently with customers with uncompleted homes. It's vital we provide certainty for customers who have been affected.”

Inno Capital is a separate entity from the Chow brothers’ NZAX-listed Chow Group.

Yet much of the coverage of the purchase has focused on the Chow brothers, who despite being commercial property magnates, are best known for their adult entertainment interests.

However, the Chows’ apparent plans for Stonewood’s future might be of interest to property investors.

Michael Chow told media they hoped to grow Stonewood into New Zealand’s number one residential house builder.

He also said they would be looking at opportunities to strengthen franchisees by funding subdivisions and might look into home finance packages.

Meanwhile, Labour’s building and construction spokesperson Phil Twyford said sub-contractors would be the victims of the Stonewood saga.

"Millions of dollars’ worth of work is likely to go unpaid, and this could well push some of these operators to the wall.”

He said that, following the Mainzeal collapse, Parliament passed a law last year that to protect sub-contractors.

“It requires payment for their work to be put aside in a fund in case the company goes belly up. But the law won’t come into effect until 2017.

"The tragedy for Stonewood’s sub-contractors is that while the law is on the books, its provisions don’t come into force in time to help them.”