Creditors have Kiama ‘ Blues ’

NEWS that the Kiama Blue Resort will become a Mercure Hotel has failed to hearten more than 50 creditors still owed more than $1 million.

Sub-contractors to Stage 1 of the Kiama Blue site are still waiting to receive payments that have been outstanding for three years.

It was announced last week that the Kiama Blue Resort would become a Mercure Hotel, which was expected to draw more tourists to the town, possibly international tourists.

Creditors Committee chairman Rob Danby said the level of development to date had been achieved "on the backs" of the 50 or so sub-contractors and suppliers to Stage 1 of the project.

"Even some three years after their invoices were submitted and agreed, they are still hanging out for payment of a total balance in excess of $1.1 million," Mr Danby said.

"Some of the creditors have "gone under" because they were not paid, others have lost their homes or suffered marital problems because their just claims have not been met, even though they trusted the developers back in January 2006 when they promised to have them paid out by January 2007."

Darren Mercer, of Mercer Constructions, is one of the primary debtors.

He said he appreciated the patience of the creditors, 17 of which were Kiama companies.

"(I"m) appreciative they (creditors) have banded all together and supported the project," Mr Mercer said.

"If they hadn"t have banded together and agreed on payment plans and the deed etc then we all would have taken a loss.

"The only winners would have been the lenders or someone who would have picked up an uncompleted site.

"We"re all here today bar a few of the creditors, unfortunately. There would have been a lot more that wouldn"t have been here; it"s just unfortunate with the timeframe and the way the market"s been with this type of investment."

But as time moves on, the 59 creditors are still no nearer to knowing when they will be paid.

Their legal representative, Warwick Colbron, said there now was a possibility of legal action.

"We"ve written to the first mortgagee and developer to obtain a date for when the creditors might be paid," Mr Colbron said.

Their response would determine whether the matter would be taken to court.

Mr Danby said the creditors had been more than patient for three years and, even if they did get paid, they would not be paid interest.

"The financiers of the project are charging interest rates and special fees amounting to in excess of $5 million at percentage rates of 19.5% per annum and above," he said.

"The creditors & will not get a cent of interest. The development might turn out to be good for Kiama in the long run, but it has badly hurt the locals without whom it could not have proceeded and who are now being told they will have to wait another six months to see whether the previously broken promises get honoured.

"They certainly have got the Kiama "blues".

"If it was not for the creditor group"s local lawyer (Warwick Colbron) they would have no security for ultimate payment and, in the words of one of the mortgagees, would have "been ridden over".

"So much for business integrity."

A message was left with developer Nick Colys asking for his comment on the matter, but he did not return the Kiama Independent"s call.