Right down to the egg guy, the Clubs of Marlborough owed a lot of people

The now-defunct Clubs of Marlborough was in debt to three butchers, a baker, their egg guy, a plumber, liquor and food wholesalers, and Stonegrill, the dining experience that was meant to revitalise their restaurant.

PwC interim liquidators Malcolm Hollis and Richard Nacey have released an interim report on the Clubs’ finances, revealing more than 120 people, organisations and businesses have made a claim or were owed money.

The 133-year-old Blenheim Workingmen’s Club, trading as Clubs of Marlborough, closed its 16-year-old purpose-built headquarters in November due to outstanding debt and declining revenue.

The list of claimants also included auditors, accountants, laundry and cleaners, security firms, office and kitchenware suppliers, gaming services and entertainers. Stonegrill was added to the restaurant in 2021.

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There were local businesses, such as BP Computers, Callahan and Martella Electrical, Cuddon Ltd, Mayflower Studio, Paper Plus Blenheim, and Viridian Glass, and there were larger organisations such as Clubs NZ, Coca-Cola, Countdown, Eftpos, Genesis Energy, the Ministry of Justice, Internal Affairs, Spark, and the Yellow Pages.

Other creditors included the Marlborough Civic Theatre Trust, the Marlborough District Council, two family trusts and more than 30 individuals.

Members had loaned the Clubs a total of $793,599, the Marlborough Returned and Services Association (RSA) loaned $60,636, and the Marlborough Bridge Club loaned $206,734.

Inland Revenue sought close to $1 million for outstanding GST and income tax, and staff were owed about $160,000 in total.

The Clubs’ gaming licence had expired, and the Department of Internal Affairs refused to grant a new one.

Hollis and Nacey said the Clubs had struggled with large overhead and operating costs, without the revenue to cover it. Only 25% of the total floor space provided an income, but the business still had to meet the costs of the other 75%.

“The Club was therefore unable to meet its financial obligations and creditor debt as they fell due.”

When liquidators were formally assigned by the High Court, they would be looking to repay secured creditors first, who were owed a total of $3.62m, the bulk of which was owed to ANZ Bank.

They would then look to repay preferential creditors, including employees and Inland Revenue, whose claims totalled about $1.15m.

Any funds remaining at that stage would go to about 115 unsecured creditors, who were seeking about $1.66m in total.

“This is an estimate, and we expect more claims to come through in the coming period,” the report said.

The report said if the property, plant and equipment sold for their value on paper it would produce about $13m to pay off debts, however there was no guarantee they would be realised at that amount.

The Clubs also had shares in Foodstuffs worth $5513, and $43,340 in the Clubs’ sectional accounts.

Another $50,059 was owed to the Clubs, and Hollis and Nacey said they were working through those debts to check they were accurate before contacting the debtors to seek payment.

Since the doors closed, Hollis and Nacey had organised security for the site to prevent theft or damage to the assets, and the Clubs’ digital assets were also protected from unauthorised access and data breaches. Insurance had been reviewed and retained.

A hearing at the High Court in Blenheim on March 10 would likely result in liquidators being formally appointed, who would gain the power to hold meetings with creditors.

They would also be able to investigate the actions of management, to see if there were any insolvent transactions, avenues of recovery, or breaches of law, which could be referred to authorities for further investigation.

“If you have any information that you believe would lead to realisations for the benefit of creditors, please send us detailed evidence for our consideration,” the report said.

They would also gain the power to sell assets, however Hollis said last week he expected it would take “many months” to discuss aspects such as the future of the strategically valuable building before any decisions about selling assets would be made.

Margaret Sowry, one of a group of members appointed last month to liaise with the liquidators, said while it was interesting to read the report, there was not much the membership could do until the liquidators were formally appointed next month.

The group’s main concern in the meantime was finding an interim replacement venue, as it was proving difficult to find a venue large enough and also equipped for serving food and drinks, she said.

According to the Clubs’ own history book the building was set up to be three sevenths owned by the RSA and four sevenths by the Workingmen’s club, Sowry said, so she suspected any leftover money would be “divvied up” by those proportions, which could go towards a new venue.

“But nobody knows what [the building] will sell for … it depends on what somebody is prepared to pay for it.”

However, the Club’s rules also said if it was closed down, any leftover funds were to be donated to charity.

Sowry said she was confident the interim liquidators understood their position and would seek the best outcome for everyone involved.

“The liquidators know all the details, and they’ve got a very big job to do, it’s a bit of a mess really. But what actually happens is out of our control now.”