Trucking operator risks repeat of big company collapse 20 years ago

Repossessions, creditors’ demands, default notices, potential eviction, court action and applications to liquidate.

Mosgiel trucking and excavation operator Malcolm Burns is fighting for his business’s life.

But at least he has seen it all before.

Twenty years ago his companies based in Wyndham, Southland, were in deep trouble with debts of about $ 10 million. They were eventually put into liquidation, and in the final wash-up creditors were left $ 6m out of pocket.

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After several jobs and guilty pleas to a dishonesty offense not related to his business, Burns was ready to go into business again in March 2018.

He registered three new companies – Burns Group 2018, Titan Bulk Haulage, Otago Excavation – and began buying trucks and other equipment.

But last year things took a turn for the worse.

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In June 2021, Kiwi Asset Finance repossessed about 35 trucks, forklifts, utes and trailers after Titan Bulk Haulage got behind on its payments.

The vehicles and equipment were returned a few months later when Burns got his payments up to date. A report by Kiwi Asset Finance alleged it was still owed $ 1.47m after Burns paid the overdue amounts.

More repossessions followed. Later the same month, Komatsu, a construction equipment supplier, repossessed a digger and this year the company’s computers and other gear were taken back.

Southland Times reporter Phil McCarthy confronts Burns in 2004 after his company Rural Haulage went bust.

Robyn edie / Stuff

Southland Times reporter Phil McCarthy confronts Burns in 2004 after his company Rural Haulage went bust.

Three applications to liquidate companies in the Burns Group 2018 were heard in the Dunedin High Court this year. In the latest, against Otago Excavation, Burns was given until the end of July to pay $ 280,000 to Invercargill quarry firm J Crooks & Sons for aggregate.

Two applications to liquidate Titan Bulk Haulage earlier in 2022 were settled.

In November 2021 Burns, who is in his early 50s, narrowly avoided being evicted from his yard in Sinclair Rd, Mosgiel. His company, Burns Group, obtained a last-minute interim injunction preventing the landlord from canceling his lease for not paying rent and other outgoings.

Burns told the High Court in Dunedin he had a range of cross-claims against the landlord. Justice Rob Osborne ruled the Burns Group had an arguable case for relief and granted the injunction.

Burns runs his current business, Burns Group 2018 Ltd, from a yard in Mosgiel near Dunedin.

Supplied

Burns runs his current business, Burns Group 2018 Ltd, from a yard in Mosgiel near Dunedin.

It’s understood the parties will go to arbitration.

Burns set up Rural Haulage in 1993 and remained small until a long-established Invercargill engineering firm called JK Stevenson Ltd began investing in his business.

Burns’ mother, Coral, worked for JK Stevenson as an administrator and when the company was seeking to diversify, she put the firm in contact with her son.

The Invercargill firm, employing about 30 people, plowed about $ 3.6m into Rural Haulage, which expanded rapidly but was soon in trouble. JK Stevenson stopped its cash injections about 2002 and Rural Haulage soon folded, with huge debts. The fall-out was, sources say, acrimonious.

Burns told the liquidators the company was owed $ 1.3m, but the debt was in dispute and the liquidators did not pursue it.

They found Rural Haulage owed secured creditors – those with charges / mortgages over the company’s assets – $ 4.2m and unsecured creditors $ 5.7m.

Rural Haulage trucks had to be sold after it went into liquidation in 2006.

Jill Robb / Stuff

Rural Haulage trucks had to be sold after it went into liquidation in 2006.

Big creditors included Inland Revenue, $ 323.00, Department for Courts, $ 395,000, Land Transport Safety Authority, $ 291,000 and Shell, $ 357,000.

A related company, Rural Haulage Equipment, which went into liquidation with Rural Haulage, had $ 6.5m in debts. After all assets were sold and fees paid, the company still owed $ 5m.

Creditors spoken to by Stuff are still angry Rural Haulage funds were used to build a building on a yard owned by the Burns family. They say Burns is plausible and persuasive, always ready with an excuse for why he can’t pay bills.

“It’s hard to work him out,” says one creditor who spoke on the condition of anonymity. “He’s got a different grasp on reality. In my view he’s a disgrace to the transport industry. ”

After the collapse of the Rural Haulage companies, Burns was employed as logistics manager for Cadbury in Dunedin. He claims to have developed a new transport model that saved the company money.

The Burns Group 2018 Ltd has a yard in Mosgiel.

Supplied

The Burns Group 2018 Ltd has a yard in Mosgiel.

In 2010, he pleaded guilty to three charges of dishonestly using a Kiwibank statement in Dunedin in connection to an allegedly false statement to police that a Ducati motorcycle had been stolen.

He also worked for Cadbury in Melbourne as manager of its supply chain.

In 2016, he was back in New Zealand to work for Mason Developments, an excavation firm in Dunedin, as its general manager. Mason Developments declined to talk about Burns, but sources said his employment did not end on good terms.

Burns also worked for more than a year for Dunedin company Night ‘n Day Stores, but his employment ended suddenly. Night ‘n Day confirmed Burns had worked for the company as its procurement manager but would give no further details.

The Burns Group has two shareholders – Burns holds 60,000 shares and Dunedin businessman Leonard Cheng owns the other 60,000. Cheng resigned as director of the company in January 2022. Auckland businessman Peng Qian offloaded 26,700 shares in January 2021.

Cheng asked for emailed questions but then declined to answer them.

Burns replied through his lawyer that he would not be answering any of the emailed questions except to say that in relation to the J Crooks & Sons matter, “an agreement was reached prior to the adjournment and a significant reduction in the debt was made at that date ”.

His lawyer was asked about the size of the reduction but did not respond.

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