Crisis erupts! Another major developer placed in receivership, 278 homes left unfinished and 120 cash investors at risk of losing everything

On 2 August 2024, New Zealand's High Court ordered several companies within major Auckland apartment developer Du Val Group into interim receivership. Du Val Group was founded by property developers Charlotte and Kenyon Clarke, who once produced a reality show that never aired. Du Val has built hundreds of apartments, mainly in South Auckland, raising funds by attracting investors. Although the Clarkes appear to live lavishly, their business activities have repeatedly attracted media reports of dissatisfaction among investors and contractors.

 

That day, New Zealand's Financial Markets Authority (FMA) said approximately 120 investors had invested in Du Val-related entities. The court issued asset preservation and interim receivership orders against Du Val Capital Partners and other Du Val Group companies.

 

Company background

 

Du Val Group was reportedly established in 2013 and has more than 60 employees. It has developed approximately 774 homes in Auckland over the past six years, with another 278 under construction. Its business model encompasses design management, cost planning, approvals, early pre-contract involvement, tendering, procurement and construction.

 

Since Charlotte Clarke took over as chief executive in November last year, Du Val says it has continued to thrive under her leadership, reaching new milestones and maintaining strong performance across its operations. The company also runs the Du Val Foundation, which has supported children and families in need since 2017.

 

People involved

 

John Dalzell, Du Val's chair and an independent director, is a well-known property expert. Kenyon Clarke is a director and chair of the investment committee, responsible for reviewing and recommending new projects. He was bankrupted by the global financial crisis but was discharged from bankruptcy 13 years ago. Lawyer Owen Culliney is a founding partner of law firm iClaw, specialising in mergers and acquisitions, corporate structures and large-scale property development.

 

High-profile couple Kenyon and Charlotte Clarke

 

Although Du Val's business model has shown some success, its underlying operations have been beset by problems, with the Clarkes' lavish lifestyle contrasting sharply with their company's financial difficulties. Kenyon Clarke was declared bankrupt after the global financial crisis. Although he says his bankruptcy period is over, banks are still pursuing debts. Du Val Group's senior figures include prominent property expert John Dalzell and lawyer Owen Culliney, whose involvement has failed to change the company's fortunes.

 

What developments does Du Val have?

 

Du Val Group's Lakewood Plaza development in Manukau, Auckland

 

Du Val Group states on its website that it aims to provide high-quality, affordable housing for the public. Its website also lists numerous apartment and townhouse developments. Some remain at the planning stage, while some medium- and high-density projects have been completed.

 

• Lakewood Plaza in Manukau is a 15-storey apartment building with approximately 151 apartments. A water pipe burst there in 2021;

• Mountain Vista Estate at 35–37 Walmsley Rd, Māngere, has more than 180 units, with starting prices above NZ$700,000 per unit;

• Verge Apartments at 64 Hillside Rd, Mt Wellington, is under construction, with units priced from NZ$699,000;

• Te Awa Terraces at 26–30 Earlsworth Rd, Māngere East, is under construction, with townhouses priced from NZ$829,000;

• Sunnyvale Terraces at 9–11 Sunhill Rd, Sunnyvale, is planned, with units priced from NZ$855,000;

• Edmonton Mews at 4–67 Edmonton Rd, Henderson, is planned, with units priced from NZ$849,000;

• Rātā Terraces at 87 Tui Rd, Papatoetoe, is complete, with townhouses renting from NZ$525 per week;

• Hilltop, an apartment project in Mt Wellington, is shown as a 7-storey building in renderings, with prices yet to be set.

 

Mountain Vista Estate, developed by Du Val Group on Walmsley Rd

Photograph of the development

 

Complaints from subcontractors

 

A subcontractor complained to the media that he was owed approximately NZ$500,000 across 7 projects he had worked on with Du Val Group over the past four years, mainly in retentions. He said: ‘We keep paying out. If you do NZ$1,000,000 worth of work and they need to hold a 10% retention, that's NZ$100,000. That's a huge amount for a small subcontractor like us, and the retentions keep accumulating.’ Despite repeated requests and letters from his lawyer, Du Val still refused to provide specific information and details about the retained funds.

 

Du Val's Te Awa Terraces development in January 2024

 

Company name changes

 

According to BusinessDesk, 15 Du Val Group companies changed their names on 17 July. These included Du Val Sales becoming Orange Pineapple, Du Val Developments becoming Amble Valley and Du Val Acquisitions becoming Woodle. Others included Du Val Holdings, now Farham; Du Val Health, now Shrub Holdings; Du Val Fashion, renamed Diamond Box; Du Val PT, now Flipping Lids; and Du Val Wealth, renamed Coastway. On 12 August, the High Court will hear Global Linings' application to liquidate Blue River Holdings. These moves have raised questions about the group's financial position and operational transparency.

 

 

Warnings from the regulator

 

The FMA has previously taken action over the company's business activities on several occasions. In October 2021, it required Du Val to withdraw mortgage fund advertising that gave an impression of low risk. In March last year, media reports detailed how the FMA warned residential developer Du Val Capital over misleading and deceptive statements to mortgage fund investors. The FMA considered that investors had been misled about why Du Val Capital Partners had suspended cash distributions from the fund. The company proposed converting those cash distributions into fund units pending a potential public listing.

 

Last year, BusinessDesk reported that a group of investors had sought legal help after Du Val's build-to-rent fund suspended payments. A similar situation had previously arisen with Du Val Capital Partners' mortgage fund, which suspended repayments at the end of 2022. The FMA considered that investors may also have been misled about their rights regarding the suspension of repayments. The warning concerned communications in December 2022, when DVCP and Du Val Group contacted investors to outline plans to restructure the Du Val Mortgage Fund.

 

Reflections and conclusions

 

Du Val Group's bankruptcy highlights the potential risks in the property market and the importance of investor protection. Regulatory intervention protects investors' interests and upholds an orderly market. Du Val Group's case serves as a warning to other property developers: transparency and integrity will be crucial to the future growth of property businesses. What do you think about this case? Leave a comment below.