13 Dec 2015

Lawyers, accountants cost Solid Energy $9m

11:35 am on 13 December 2015

Lawyers, accountants and other experts cost the defunct state coalmine company Solid Energy almost $9 million when it went into voluntary liquidation in August.

Dump truck hauling coal at Stockton coal mine.

Solid Energy went into voluntary liquidation in August 2015. Photo: PHOTO NZ

The company failed due to a lethal combination of expansive local investment and a collapsing price of coal.

This left it with debts of $347m, mainly owed to banks, according to its most recent annual report.

These were completely unpayable, and the company went into voluntary administration, which required its assets to be sold and the company wound down over two and a half years.

Information acquired under the Official Information Act shows this process was expensive.

It shows Solid Energy spent $5.8m in the five months up till the date that the administration was started, $2.7m while the administration was underway, and another $250,000 in related costs after the administration ended.

Solid Energy's headquarters.

The company's collapse left it with debts of $347m. Photo: RNZ / Conan Young

These costs included the fees of the administrators, KordaMentha, and also the legal costs of the banks that it owed money to.

The company also paid the legal costs of various local government councils for determining the extent of the company's environmental obligations.

After the administration ended, Solid Energy was run under a document known as a Deed of Company Arrangement and no more costs are to be expected.

In the meantime the company is continuing to manage its coal mines in order to sell them as going concerns if possible.

No information is available on how well this process is going.

The demise of Solid Energy brought to an end seven decades of state-run coal mining in New Zealand and weakened a mining tradition that goes back to the early days of the trade union movement.

Solid Energy's collapse was matched by simiar failures in several other countries, including Australia and the United States, as the falling price of coal became a universal problem.

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