Construction company

PHOTO: FILE

Businesses linked to struggling civil construction companies owe over $19 million, with the bulk of it owed to BNZ, according to the first receivers’ report by BDO.

RMS Contracting, along with associated companies TW Group and TW Civil, entered receivership in November last year, signaling a significant shake-up in New Zealand’s construction sector.

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Ownership and Downfall

The ultimate shareholding company, TW Group, was owned and directed by Fred Witton and Ross Troughton and had its registered office in Hamilton. Following a downturn in the construction industry, the companies’ operations stalled, exacerbated by excessive spending on machinery and equipment financed on credit.

“With cash flow constraints and low utilisation of significant amounts of equipment and machinery, the companies were reliant on the ongoing support of the bank (BNZ) to continue trading,” BDO stated in its report.

As liquidity pressures mounted, the directors requested BNZ to appoint receivers.

Breakdown of Liabilities

The BDO report revealed the following liabilities:

  • TW Civil: $12.2 million in total liabilities, with $11.4 million owed to BNZ.
  • RMS Contracting: Over $6 million in liabilities, including $1.6 million owed to BNZ.
  • TW Group: $982,000 owed as unsecured loans from shareholders.

Additionally, the companies collectively owe:

  • $526,000 to Inland Revenue for payroll and GST taxes.
  • $217,000 to staff in unpaid holiday pay.

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Asset Sales Underway

BDO, represented by Andrew McKay and Rees Logan, is managing the companies’ receivership. The primary assets include civil machinery and motor vehicles, which are being collected for sale.

BDO has not disclosed the exact value of these assets, citing the need to secure the best possible price. The assets are expected to hit the market within the next two months.

Impact on the Industry

This collapse underscores ongoing challenges in New Zealand’s construction sector, with rising costs and economic uncertainty pressuring businesses. The situation serves as a stark reminder of the importance of financial management in a volatile industry.

SOURCE: RNZ