Dealership owing $4.7m in liquidation
An Auckland dealership has been placed in liquidation owing creditors more than $4.7 million, with increased competition and rising operating costs cited as some of the reasons for its financial struggles.
Vehicle Direct Ltd, which operated a used-car dealership on Great South Road, Otahuhu, has been in business since 2013 and Muhammad Waseem is the sole director and shareholder.
Mohammed Jan, of Liquidation Management Ltd, was appointed liquidator of the company and two associated entities, Auto Trading Ltd and Auto Compliance & Repairs Ltd, early in September.
Jan released his first reports into all three operations about a week later and notes Waseem resolved to place Vehicle Direct in liquidation after seeking professional advice.
“The director advised that the company experienced significant financial difficulties in the period leading up to liquidation,” he explains.
“The contributing factors included an inability to adequately recover costs, liabilities arising from guarantees, and challenging economic conditions.
“External influences, increased competition, and rising operating costs further eroded profitability.
“In addition, the company faced a lack of sales, excessive overheads – including interest payments – and insufficient working capital to sustain ongoing operations.
“These combined pressures placed unsustainable strain on the company’s cash flow and overall solvency.”
Westpac NZ is among the secured creditors listed in the liquidator’s report and claims it is owed $3.2m across the three companies.
Meanwhile, Vehicle Direct alone owes Inland Revenue $427,564, there are staff entitlements of $232,761 and unsecured creditors are claiming $764,797.
Waseem is also the sole shareholder and director of Auto Trading Ltd, which operated as a vehicle import and wholesale business and was incorporated in 2014.
That company went into liquidation on September 3 after encountering sustained financial difficulties. It owes Inland Revenue $114,824 and unsecured creditors $359,455.
The liquidator’s first report about Auto Trading Ltd says the company encountered sustained financial difficulties leading up to its liquidation, including operating costs and excessive overheads.
“Ultimately, the company was no longer able to sustain its operations. With mounting liabilities and insufficient revenue to meet obligations, liquidation became unavoidable,” adds Jan.
Waseem’s third company, Auto Compliance & Repairs Ltd, was based in Manurewa and previously traded as VD Panel & Paint. Incorporated in 2014, it provided vehicle compliance and repair services.
Jan’s report on this firm cited the same reasons for its liquidation as those given for Vehicle Direct.
Besides money owed to Westpac NZ, the company has a debt to Inland Revenue of $285,537, staff entitlements of $49,494 and unsecured creditors are owed $292,140.
The liquidator’s reports note all three companies are party to pending legal proceedings and he has given no estimated date for completion of the liquidations.
