A report on ASB Showgrounds has found the Covid-19 pandemic, its impact on the event industry and growing rental costs sent the centre over the edge and into liquidation.
ASB Bank is the main creditor, owed $2.99 million. A number of other secured creditor claims are still to be investigated.
Auckland's ASB Showgrounds, one of the country's biggest venues, announced it had gone into liquidation last week.
The first liquidators report by Paul Vlasic of Rodgers Reidy also showed preferential creditors, including the Inland Revenue, are owed about $1.5m.
Before liquidation, a number of employees were made redundant in an attempt to reduce costs. However the 16 employees who remained were this year all made redundant but were re-employed on casual contracts.
Vlasic said all staff wages and holiday pay had been paid, although $211,000 in redundancy payments was still outstanding.
"The liquidator will review these calculations to confirm their accuracy and to determine the extent to which these liabilities are within the current individual limit for preferential employee claims of $23,960."
The report noted that because of the size of events held at the showgrounds, the board was significantly affected by the Covid-19 pandemic and was only able to operate at alert level 1.
Ongoing changes to national and Auckland alert levels meant the venue suffered "significant losses" last year and into early 2021, as Auckland entered another lockdown.
The alert level changes also resulted in a feelings of uncertainty within the events industry, the showgrounds' main source of income, the report said.
"The board has advised that the reason for insolvency was due to the Covid-19 pandemic and the impact that this has had on the board's ability to run events, coupled with increasing rental costs in Auckland."
The board leases land owned by the Cornwall Park Trust Board (CPTB). The report found the lease agreement "did not provide for any lease concession" because of the pandemic and alert level changes.
The board had been in arbitration with the Cornwall Park Trust, which the Herald understands wanted to put up its annual rent from $750,000 to $2.3 million. The board has spent around $725,000 on legal and arbitration fees challenging the rent hike.
The showgrounds have been hosting events for more than 160 years.
As of March this year, the venue had lost four major events, including the Home Show and the Royal Easter Show.
Last year, 14 major events were cancelled because of the pandemic, plus 11 smaller shows and concerts.
"Prior to liquidation, the board had worked with a number of parties to try and determine a way forward that would have enabled the continued operation of the board and prevented the need for appointment of a liquidator," the report said.
"This included engaging external advisers to liaise directly with their significant creditors, council and government agencies.
"While support was offered from a number of these parties, including considerable accommodation from the board's bankers, collectively this was not sufficient to resolve the financial situation the board [faced]."
The report listed assets, including buildings and leashold improvements with a book value of $22.01m.
Vlasic's report said an investigation would be carried out to determine if any insolvent transactions had occurred and whether there had been any potential legislative breaches by the board or its officers.
It was still very early days in the liquidation process, Vlasic said.
"There are still a number of unknowns and we are waiting on additional information to determine the way forward.
"We know there are many interested parties in this and greatly appreciate everyone's patience as we undertake this work."