Archive | Insolvency

Supreme Court rejects Pandey bid to continue scrap over running of liquidation

CP Asset Management Ltd (Prakash Pandey) has lost a Supreme Court bid to overturn a Court of Appeal judgment which reinstated the original court-appointed liquidators to another Pandey company.

Moteliers Brian & Bridgit Lawrence, now of Tauranga, got summary judgment for $1 million against NZ Properties Holding Ltd (director Charles Pandey, Mt Roskill, head of the Pandey/CP hotel group), weren’t paid and had the company wound up in 2012.

The claim arose from the state of a building the Lawrences leased from the Pandey group and the consequent effect on their business. The Rotorua motel flooded 51 times in 5 years and went out of business in 2008.

Damien Grant & Steven Khov (Waterstone Insolvency) were appointed liquidators of NZ Properties Holding, but CP Asset Management Ltd, listed as an NZ Properties Holding creditor, had the support of 5 related companies and another with the same registered office (the Pandey hotel group’s Queen St office) at a creditors’ meeting in August 2012 to oust Mr Grant & Mr Khov and replace them as liquidators with Arron Heath & Mike Lamacraft (Meltzer Mason Heath).

Justice Geoffrey Venning declined Mr Grant & Mr Khov’s application to set aside the creditors’ resolution and appointed Mr Heath & Mr Lamacraft in their place. The Court of Appeal reversed that decision on the basis that the resolution was contrary to the interests of unsecured creditors and was causing prejudice to the Lawrences.

The Supreme Court said in yesterday’s decision: “The Court of Appeal’s concern was that the creditors may not get an adequate investigation into the affairs of the company if the replacement liquidators remained in office and, in particular, that the possibility of recovery from the Pandey family would not be adequately investigated.

“Various transfers of assets over the period 2006-11 out of NZ Properties (then called CP Holdings Ltd) were outlined by the Court of Appeal. These had left the company without assets. The Court of Appeal noted that Justice Venning’s attention does not seem to have been drawn to these dispositions.”

The Supreme Court ruling went on to say that the difference between the lower courts’ decisions depended largely on a differing view of the facts: “There is thus no point of general, public or commercial significance. Nor is there the possibility of a miscarriage of justice.”

For their efforts, the Supreme Court made costs orders of $2500 in favour of Mr Grant & Mr Khov as liquidators, and secondly in favour of the Lawrences.

Attribution: Judgment.

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Mainzeal receivers make recoveries, but big payout relies on liquidators’ court action

The Mainzeal construction group’s receivers said in their second report, filed yesterday, they had recovered $22.53 million, paid out $18.4 million and may retire before their next report is due out, in February 2014.

But the receivers, PricewaterhouseCoopers partners David Bridgman & Colin McCloy, are only dealing with a small part of the collapsed group’s debts, not the $106 million claimed by unsecured creditors. That is being handled by the liquidators, Brian Mayo-Smith & Andrew James Bethell (BDO Auckland) & Stephen Tubbs (BDO Christchurch).

The Bank of NZ appointed Mr Bridgman & Mr McCloy as receivers of Mainzeal Property & Construction Ltd & Mainzeal Living Ltd on 6 February, 3 weeks before the liquidators were appointed to those 2 companies, Mainzeal Group Ltd, company headquarters owner 200 Vic Ltd and other group companies.

In their report to 5 August, the receivers said they’d paid the BNZ $4.85 million out of the $11.3 million it was owed. Employees have preferential claims of $5.3 million, which are likely to be paid, but also have unsecured claims.

The liquidators got High Court orders in June pooling the liquidations and requiring a $20.9 million contribution from Richina Global Real Estate Ltd for 2 debts and Isola Vineyards Ltd for a $2.5 million debt. An application by Richina & Mainzeal director Richard Yan against the pooling & contribution orders has been set down for hearing in the High Court this month.

A substantial payout to unsecured creditors relies on the liquidators’ success in this litigation.

Attribution: Receivers’ & liquidators’ reports.

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Judge rejects Tauber compromise scheme – but nobody around to bankrupt him

Published 23 April 2012

A High Court judge turned down insolvent entrepreneur Andrew Tauber’s debt compromise scheme today, but nobody was available to take the consequent step of bankrupting him.

Mr Tauber succeeded in getting the required creditor majorities by number & value in support of his proposal in December. But the liquidators of APG Holdings Ltd (ex-Corporate Events Ltd) were left out in the cold, with their $13 million claim rejected.

The proposal to pay an overall 1.6c:$1 – or 1.3c:$1 if APG was included – went before Associate Judge Roger Bell for approval today. The scheme involved debts of about $90 million (the figure changed during the day, depending on what was or wasn’t included), most of sheeted home to Mr Tauber from guarantees.

At the start of the hearing, counsel for Dominion Finance Group Ltd (in liquidation & receivership), Claire Mansell, withdrew that company’s application to bankrupt Mr Tauber and told the judge the company’s position would remain the same if the debt compromise scheme was rejected.

After the hearing, Mr Tauber said there were no outstanding applications to bankrupt him, so he’s neither bankrupt nor required to pay into a scheme for his creditors. Associate Judge Bell told counsel for APG it could take up to a year to get its substantive case to a hearing, and it won’t be in a position to apply to bankrupt Mr Tauber until that’s decided.

During today’s hearing, Associate Judge Bell commented several times on the way Mr Tauber arranged his affairs to ensure that, if he had to carry any liability, guarantees aside, he would have minimal personal exposure because he would have minimal personal assets.

“When he sets up a trust, he sets up a corporate trust most of the time. If the trust has a liability, it’s a corporate liability and the corporate trustee would have an indemnity.”

Later the judge said that if APG’s liquidators got judgment against Mr Tauber, “I am sure they will find the cupboard bare”.

This “deliberate policy of minimal accountability” meant Mr Tauber wouldn’t have to answer fully for liabilities he incurred. “He has liabilities of $80 million or so, signs his guarantees then tells his creditors $10,000 is all they will get.

“Added to that, the liquidators have also adduced evidence regarding Mr Tauber’s accommodation arrangements. He lives in the Shangri La apartments (in Herne Bay), in an upmarket apartment. Evidence the liquidators have obtained is the apartment is worth $2 million and is owned by his wife & a lawyer. I infer there is some kind of trust there, in which Mr Tauber has no interest as trustee or beneficiary, but he is able to live there without accounting to his creditors.”

Associate Judge Bell said there was a general public concern that failed businessmen could carry on living the high life, but pay little back to their creditors: “There is a proper basis for the indignation within the community. When a man such as Mr Tauber adopts a policy of reduced accountability, it is appropriate that the court says you incur bankruptcy because that is the consequence when you do adopt such a policy.

“Accordingly, in my view there are also good grounds why this proposal should not be approved. It would be rewarding Mr Tauber for adopting his policy of reduced accountability.”

This story doesn’t contain any of the submissions of APG counsel Murray Branch or counsel for Mr Tauber, Mike Whale. I’ll follow up with that, plus some more of the judge’s comments, in the morning.

Earlier stories:

17 October 2011: Honk farm bought for $2.2 million above auction price, still way below debt

18 August 2011: Sub-6% yields on 2 properties, Honk’s Silverdale farm passed in

8 June 2011: Judge questions value in cash-strapped Official Assignee’s request to extend Kim Spencer bankruptcy

30 March 2011: Allied learns Honk 2 will default on $23 million Silverdale loan

10 September 2010: Kohimarama retirement village plan change approved

17 March 2010: Council decides against letting Papakura’s golfcourse become retirement village

1 February 2010: Honk proposes retirement village for Papakura Golfcourse

U: The names behind the action, the week to 2 August 2009, part 2, Ex-events & pubs director Terry Wilson bankrupt

U: The names behind the action, the week to 25 January 2009, part 5, Honk closes Education Holdings (now Fernstar)

14 April 2008: Honk duo’s Kohi retirement village plan change out for submissions

U: The names behind the action, the week to 14 October 2007, part 3, PWC takes over BFM liquidation

U: The names behind the action, the week to 23 September 2007, part 1, Capital Events Holdings wound up after bad-oyster case

7 November 2002: Webster withdraws injunction stopping Takapuna Telecom House sale

 

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Attribution: Court hearing, story written by Bob Dey for the Bob Dey Property Report.

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Tauber debts total $109 million – and lenders knew guarantees were worthless

Published 24 April 2012; this story accompanies one written yesterday – see link below:

Against debts of about $90 million (but as high as a gross $109 million in one count), much of it through guarantees to lenders, Auckland entrepreneur Andrew Tauber offered a small payout to creditors, in the range of about 1.6% overall.

Overall, because his creditors were split into 4 categories. Some depended on a return on their security and would get nothing more if there was a shortfall from realisation. Some smaller creditors were offered 10% of their debt. The rest would get $500,000 split among them – $250,000 to start, followed by a payout of $83,000/year over 3 years.

Mr Tauber’s evidence to the Auckland High Court hearing yesterday on his proposal under part V of the Insolvency Act was that lenders knew the basis of his borrowing, that he used trusts & corporate trustees to separate himself from the transactions and that his guarantees were essentially worthless.

Most of his creditors went along with the compromise proposal, giving the required levels of support by number & value when the scheme was put to them in December. One creditor which had some of its claim counted for voting purposes, but was later rejected by trustee Bruce Sheppard (better known as the former chairman of the Shareholders Association than for his job as an accountant), was the liquidator of APG Holdings Ltd, one of a group of corporate events companies in which Mr Tauber was a shareholder and, of some but not this one, a director.

Despite the creditors’ majorities in favour of the compromise scheme, in court yesterday Associate Judge Roger Bell seized on corporate morality and the public’s indignation at a repeat of the biblical “dining at the rich man’s table while his creditors eat crumbs”, a vision Associate Judge Hannah Sargisson raised 2 years ago when she refused the joint insolvency application of Auckland property developers Cameron Marsh & Mark Perriam. They’d offered just under 1c:$1 on $140 million of debt, also mostly under guarantees.

Associate Judge Bell said there was no evidence of misconduct in Mr Tauber’s affairs, but he was reticent on how he came to amass such huge liabilities and there was concern about how he’d structure his affairs to minimise liability.

Associate Judge Sargisson extended the behaviour of Mr Marsh & Mr Perriam to its effect on the integrity of the insolvency regime, and Associate Judge Bell did the same, finding reason in these causes to decline the compromise even though it would have put creditors in a better position than bankruptcy would.

Mr Tauber, a partner in the Honk Group with Paul Webb, entered numerous entrepreneurial ventures after he left accountancy firm Ernst & Young in 2003, including a group of corporate events companies, acquisition of the Westpark marina, rezoning of a piece of land at the edge of Selwyn College in Kohimarama for a retirement village and an unsuccessful proposal to turn the council-owned 9-hole Papakura golfcourse into a retirement village (on this one, the judge seemed focused on the decline in value of golfcourses rather than the potential value from redevelopment, which was Mr Tauber’s intention). Then he popped up as the employer of another prominent insolvent, Kim Spencer, on a farm north of Wellsford owned by Honk Cows Ltd (now called TG Cows Ltd).

He told the court he was earning $180,000/year, $120,000 from Coastal Dredging & Construction Ltd and $60,000 from Coastal Dredging Pty Ltd in Queensland, and also worked in the trust-owned farm business, but didn’t draw a salary from that.

Counsel for APG Holdings, Murray Branch, took 2 quotes from Mr Tauber’s evidence –  “The business was founded on zero equity” and “I do not draw a salary if the business is still developing” – and concluded: “Mr Tauber should not be out there running these zero-equity type companies.”

Counsel for Mr Tauber, Mike Whale, said Mr Tauber had personal assets of only $10,000. Mr Whale agreed with Associate Judge Bell that Mr Tauber’s home was “fairly high class” – a $2 million apartment in the Shangri La tower in Herne Bay, with his wife and a lawyer registered on the title as owners.

Given the judge’s view, it was always going to be an uphill battle for Mr Whale to convince him that Mr Tauber had done things by the book. Mr Whale said the court had found in earlier cases that arranging his affairs so nothing ended up in his own name was “unobjectionable: That is the way it is done….

“If there was a problem about the structure, that is something Parliament should address. If it was being abused, there are provisions in the insolvency regime regarding gifts, but he says he has not made gifts, he has not transferred anything n the last 15 years to trusts, there are no insolvent transactions to revisit. So the regime is not affected by that structure.”

The suggestion that Mr Tauber had the power of appointment and control of the surplus that might arise after asset sales was “just conjecture,” Mr Whale said.

While the legal requirements on disclosure for an insolvency scheme were minimal, Mr Whale said Mr Tauber had offered more information to creditors. In addition, he said: “The sophisticated creditors knew there was virtually no asset backing behind the guarantee. However, if Mr Tauber didn’t want to be bankrupted he had to make his peace with them.”

Associate Judge Bell issued an oral judgment, declining to approve the insolvency scheme, but Mr Tauber said there were no outstanding applications to bankrupt him, so he’s neither bankrupt nor required to pay into a scheme for his creditors.

The one creditor with an application filed to bankrupt him, Dominion Finance Group Ltd (in liquidation & receivership), withdrew its application at the start of yesterday’s hearing and counsel Claire Mansell told the judge the company’s position would remain the same if the debt compromise scheme was rejected.

Earlier stories:

23 April 2012: Judge rejects Tauber compromise scheme – but nobody around to bankrupt him

17 October 2011: Honk farm bought for $2.2 million above auction price, still way below debt

18 August 2011: Sub-6% yields on 2 properties, Honk’s Silverdale farm passed in

8 June 2011: Judge questions value in cash-strapped Official Assignee’s request to extend Kim Spencer bankruptcy

30 March 2011: Allied learns Honk 2 will default on $23 million Silverdale loan

10 September 2010: Kohimarama retirement village plan change approved

17 March 2010: Council decides against letting Papakura’s golfcourse become retirement village

1 February 2010: Honk proposes retirement village for Papakura Golfcourse

U: The names behind the action, the week to 2 August 2009, part 2, Ex-events & pubs director Terry Wilson bankrupt

U: The names behind the action, the week to 25 January 2009, part 5, Honk closes Education Holdings (now Fernstar)

14 April 2008: Honk duo’s Kohi retirement village plan change out for submissions

U: The names behind the action, the week to 14 October 2007, part 3, PWC takes over BFM liquidation

U: The names behind the action, the week to 23 September 2007, part 1, Capital Events Holdings wound up after bad-oyster case

7 November 2002: Webster withdraws injunction stopping Takapuna Telecom House sale

 

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Attribution: Court hearing, story written by Bob Dey for the Bob Dey Property Report.

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Judge fights bankrupt Stephen Kelly’s corner in courtroom bout with receivers’ lawyer

Published 22 August 2011

Auckland High Court associate judge Roger Bell has again attacked the case brought by the receivers of lender St Laurence Funding Ltd to wind up 3 companies associated with bankrupt property developer Stephen Kelly.

The applications to liquidate Great Western Land Ltd, Merchant Land Ltd & Progression Development Ltd – directors David McCall, Grafton (Great Western & Progression) & Rex Terrill, Ramarama (Merchant) – were called for the first time in June, then again in July, each time adjourned after Associate Judge Bell questioned the plaintiff’s documentation or follow-up.

After another session on Friday, Associate Judge Bell adjourned the applications to Friday 16 September, once more telling counsel for the receivers they should meet Mr Kelly and visit the property at 160 Grafton Rd, Grafton, which is being subdivided into apartments and from which Mr Kelly maintained St Laurence would get paid.

Mr Kelly was adjudicated bankrupt in November 2008 with personal debts to unsecured creditors totalling $3.17 million and contingent debts, including personal guarantees, exceeding $28 million.

Counsel for St Laurence, Scott Barker, said on Friday: “There’s an admission of insolvency and that’s the end of it.” But for the judge, that was far from the end. He’d told other counsel appearing for the receivers last month he expected them to try to meet Mr Kelly – supposedly employed on subdivision of the Grafton building but, according to Mr Barker, plainly running the companies.

Mr Barker said Mr Kelly was employed by Non Carburandum Ltd, whose director was Mr Terrill. But Mr Barker said that company’s shareholder, Moos Holdings Ltd, was struck off the register in 2009. Mr Kelly remained registered as its sole director.

“This is a situation where Mr Kelly, while he’s denying he’s managing the companies, is plainly doing so. He is a bankrupt who was criticised (in an often-cited judgment by Justice Raynor Asher) and lost money during property developments. He appears the person instructing Mr Nguy (defence counsel Jesse Nguy), in breach of the Insolvency Act.

But Associate Judge Bell responded: “I appreciate that Mr Kelly has an unsatisfactory history, is a bankrupt, says he can operate the way he is because he’s an employee of the company Non Carburandum providing project management services…. While creditors often claim that value can be extracted in liquidation, it’s an all-too-familiar case that an asset is sold, administration by liquidators… and nothing left.

“I still need to find out how realistic Mr Kelly is in holding out the prospect of payment. I want to give the receivers a fresh opportunity to go on site and meet Mr Kelly.”

The judge argued there was no explanation of why St Laurence valued the security at zero, but Mr Barker told him Christchurch consultant John Grant, who produced an affidavit for the receivers, knew the property and had done the assessment, “and if they considered there were any value in this they would have exercised the power of sale”.

Associate Judge Bell: “We have the affidavit of Mr Kelly holding out the prospect of money coming in about 4 months, attaching the current valuation, an as-is value and if the development is completed, and holding up the prospect there is a chance of creditors being paid, and what I have is a stonewall statement from the receivers saying the assessment of value is nothing and a refusal from the receivers to go on site.

“At the moment I’ve got generalised answers, ‘No we’re not going to talk to Mr Kelly’, ‘No we’re not going to go on site’. I have to evaluate the generalised statements from the receivers, ‘and we value the security at zero because we say so’.”

Mr Barker tried going on the offensive: “Allied Finance receivers have asked us (his law firm) to pursue liquidation of other companies because Mr Kelly is hiding a vehicle from them. There is no evidence of sale – this is a statement of optimism from a man who has lost vast amounts of other people’s money on property developments.

“Most importantly, Mr Kelly acknowledges not only that these loans from St Laurence have been in arrears for a long time but that the companies are insolvent. It’s cashflow insolvency.

“Overlaying this, in the absence of evidence of anyone except Mr Kelly, he is managing these companies in direct prohibition under the Insolvency Act.

“A staff member of the Official Assignee says ‘I understand you are employed by Non Carburandum’. It has a shareholder that has been removed from the register, Moos Ltd. Mr Kelly refers to an application for reinstatement being made. In the meantime, Non Carburandum should not be operating. There’s no evidence from the director of Non Carburandum. He’s an associate of Mr Kelly’s.

“ There is no evidence from the Official Assignee, all we have is Mr Kelly’s statement that he’s employed on some basis by Non Carburandum and he’s given evidence on behalf of 3 other companies, and the inference I’m asking you to draw is that he’s managing them, so he‘s doing post-bankruptcy what he did to become bankrupt.

“There is no evidence that there will be any sales, there is no evidence that anybody is willing to refinance any of this subject debt and, if there was, it would have happened a lot sooner than in response to a liquidation application.”

Associate Judge Bell: “He’s holding out the prospect of $330,000 in the next 4 months.” (Mr Barker said the single loan to the companies was for $300,000 with guarantees, and the sum owed now amounted to $322,000 plus interest & costs.)

Mr Barker: “There’s no evidential basis for the statement, there is a valuation but there is no offer to refinance, there are no agreement for sale & purchase, there is simply nothing but this statement from Mr Kelly that, if he’s given some extra time, he will achieve that.

“The public interest grounds in this case are of equal relevance & importance to the admission of insolvency. The statements Justice Asher made apply equal force here.

Associate Judge Bell: “On the one hand Mr Kelly is holding out the prospect of payment, and payment in full.”

Mr Barker: “Your Honour might rightly infer the receivers’ decision to proceed to liquidation implies no faith in what Mr Kelly has to say.”

Associate Judge Bell: “At the moment I simply have statements that Mr Kelly is a bad man, has gone bankrupt. He may be a rogue, but even rogues sometimes pay their debts.”

Mr Barker: “The fundamental point is, if there were any genuine prospect of repayment, we would have something more than optimism from Mr Kelly. They would demonstrate they have a marketing programme, they would have people queuing up. It doesn’t tell us there is any demand for what Mr Kelly is offering.”

Associate Judge Bell: “He points out it’s close to Auckland Hospital… it’s low-cost accommodation.”

Mr Barker: “There’s no concrete evidence to back up anything Mr Kelly has said, nothing from a director, a prospective financier, a purchaser – an admission of insolvency.”

Associate Judge Bell: “There’s an assertion of balance-sheet insolvency & inability to pay. I appreciate there’s cashflow insolvency, but … I have to evaluate those matters.”

Mr Barker: “Yes, but you have to do that on an evidential basis. There’s not a statement from an accountant saying he’s looked at the books.”

Associate Judge Bell: “And refusal from your clients to go on site and even meet or find out more.”

Mr Barker: “Mr Grant says why the receivers, in considering your Honour’s invitation, considered it would be a complete waste of time. It was not a decision they took lightly, but Mr Grant considers Mr Kelly to be unreliable. If there is value in this development, the liquidators can progress it. But the current administration of it is entirely unsatisfactory.”

During this interchange, defence counsel Mr Nguy was left on the sideline.

Mr Nguy: “It’s more of a personal attack on Mr Kelly and not concentrating on the real issue here. The affidavit of Mr Grant accepts there is security for the property. He says the first mortgagee is MTLT and this company has been struck off. Mr Grant has got it wrong, the first mortgagee is MTLFT, MTLT is a completely different company. [I couldn’t find MTLFT on the Companies Register.]

“He (Mr Grant) valued the security at zero but has nothing to justify that. He then said he met Mr Kelly on numerous occasions back in 2008-09 and on site. Mr Kelly would say he had met Mr Grant only twice, once in Christchurch, once on site. They can do a lot in 6 months, let alone 2 years.

“Saying there is nothing to prove sale – I have been emailed yesterday 2 contracts by the solicitor of the purchasers which is Richard Ellis Law, 2 agreements to purchase 2 units. In total 10 apartments have been completed & sold. The reason no settlements have taken place is body corporate litigation within the building and LINZ could not issue separate title for those units, hence the delay.”

Mr Nguy said the body corporate now had a manager and there was co-operation between the body corporate and his clients.

“Several of the current purchasers have settled 6 of the units on the old title. By 6 September, 6 of the units will be settled and $48,000 will be available to pay the plaintiff and a spreadsheet sets out how the rest of the debts can be paid. As of yesterday (last Thursday), my firm has been instructed to take over the settlement of the units and I expect settlement will take place as scheduled and payment will be made in 4 months.

“If the security is valued at zero, what is the point of placing the company into liquidation? Would it not be better for the defendants to be given time to pay the debts back?

“The shareholders are ordinary New Zealanders, better the debts get paid. The property has a first-ranking mortgagee; if the company is placed in liquidation they will sell the assets and nothing will be left over to the plaintiff. It’s best if the company be given the opportunity to settle the debts. What is another 4 months with the opportunity the debt will be fully paid?”

On Mr Barker’s submission that Mr Kelly was running the companies, “Mr Kelly says he has simply been authorised allowed by the Official Assignee to work as a project administrator for this development. The general manager of Non Carburandum is Mr Edmond, and he is the person who is running the company.

“Mr Kelly is not controlling the company, he is simply working for the company, the company needs a person to do the running around and he is the best person because he has knowledge of the building for a period of time. Yes, Mr Kelly is bankrupt, but even a bankrupt can work.

“There is a real prospect that the debt will be paid. It is a good building, it is in a very good location, close to the hospital & the medical school, the ground floor is converted into motel-type accommodation, it is a very attractive building. There is a very real prospect the debt will be paid….”

Mr Nguy said the top floor of the building had 47 parking spaces and, once purchase of the 6 apartment units settled, a second-tier finance company was waiting to refinance the St Laurence loan.

When Mr Barker said this was all evidence from the bar, Associate Judge Bell commented: “Thank you for your interruption. Will you let Mr Nguy finish his submission please?” After a few more words from Mr Nguy and a suggestion from Mr Barker that the judge “is inviting some sort of informal discussion between the parties”, Associate Judge Bell added: “In these kinds of cases I get a lot of submissions from people on proposals. This is done all the time in Auckland (Mr Barker is from Wellington) – even Inland Revenue discusses with debtors.”

Earlier stories, U: The names behind the action, the week to 31 July 2011, part 1: Great Western Land, Merchant Land & Progression Developments survive for another month

26 June 2011: U: The names behind the action, the week to 26 June 2011, part 1, Judge casts doubt on documentation for liquidating McCall & Terrill companies Great Western, Merchant & Progression

U: The names behind the action, the week to 15 May 2011, part 3, Kelly associate McCall bankrupted

24 November 2008: Judge rejects compromise, bankrupts Kelly

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Attribution: Court hearing, story written by Bob Dey for the Bob Dey Property Report.

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Henderson bankrupt as judge rejects second compromise proposal

Published 11 June 2011

Auckland property developer David Henderson was adjudicated bankrupt at 5pm on Thursday after Associate Judge David Abbott concluded that the failure to win court approval for his first creditors’ proposal was his own fault, there was prejudice to creditors in delaying a decision further on a second proposal and there were public interest concerns.

Mr Henderson won 89% support in April 2010 for his first proposal, $1.5 million spread over 3 years to some of his creditors (others waived their rights), but Associate Judge Jeremy Doogue decided in March not to give court approval because some creditors, notably BankWest (the Bank of Western Australia), hadn’t been notified properly or had their debts counted.

Associate Judge Doogue didn’t take matters further than that definitive point, but the first proposal still weighed when Associate Judge Abbott came to consider the second proposal, where the creditors’ vote by value was 0.68% over the requisite 75%. The second judge disagreed with Mr Henderson’s lawyer, Daniel Grove, on whether the court required an appeal before it could revisit the creditors’ vote, and no creditor had appealed.

In an unusual decision to consider a supplementary issue once the primary question has been decided, Associate Judge Abbott said: “I do not accept that the court is precluded from determining, in the course of an application for approval, whether the requisite majority has been obtained…. The threshold question could be heard as a discrete aspect of the application for approval…”

Associate Judge Abbott didn’t dwell on which side of an argument should benefit from the need for speed, finding enough other reasons for making an adverse decision on Mr Henderson’s bankruptcy now rather than later, after 18 months of delays which opposing creditors said primarily arose through Mr Henderson’s non-compliance.

It was clear to the judge that BankWest would have been able to defeat the first proposal, a majority of those included in the payment group under the second proposal opposed the scheme (and it appeared those who waived their rights might gain a benefit in some other way), Mr Henderson’s debt level (largely based on personal guarantees) had risen from $105.6 million voted on the first proposal in April 2010 to $128.3 million at the second proposal in April 2011, and he’d signed a new guarantee for the loan to the new developer of Victoria Park Market. (Mr Henderson explained that to me last week, but his point – that there’s no new loan, but a continuation of Westpac debt on the property – got lost in other argument during the court hearing).

Details from the judgment

When the case went before Associate Judge Abbott on 31 May, Mr Grove asked for the bankruptcy application to be adjourned until creditors had considered the second proposal. Inland Revenue & BankWest opposed that delay but, if there was to be a delay, they wanted some preliminary questions considered first.

The essence of the opposition to adjournment was that this was Mr Henderson’s second proposal, it wasn’t in the public interest and it was unfairly prejudicial to creditors to allow him further time, particularly as the proposal was unlikely to be approved for several reasons.

Inland Revenue’s application arose out of a consent judgment 2½ years ago – on 8 December 2008 – for $3.7 million. The commissioner issued a bankruptcy notice on 15 July 2009, and filed the application to adjudicate on 2 November 2009.

Mr Henderson filed notice of his intention to oppose the bankruptcy application on 5 February 2010 – 4 days before it was due in court – on the grounds that he intended putting a proposal to his creditors. The proposal was filed on 23 February.

Associate Judge Jeremy Doogue rejected Mr Henderson’s first proposal on 9 March 2011 and Inland Revenue’s bankruptcy application was due for hearing on 31 March. Mr Henderson filed his second proposal (essentially the same as the first) on 30 March.

That proposal secured the requisite majority support (75.68%) on 18 April – but the validity of the vote was hotly contested by Inland Revenue, BankWest & Downer Construction – and the bankruptcy application returned to court on 19 April, with a further reprieve until 31 May.

Associate Judge Abbott said it was important to consider the period within which transactions by an insolvent could be challenged. In this case it ran from 11 December 2009, the date the application for adjudication was served: “The period is already in excess of 18 months. That is a significant period by any terms, but particularly in relation to a person involved in commercial transactions.

“Counsel for Mr Henderson argued that there was in fact no risk because Mr Henderson had been involved only in managing the development of Victoria Park Market for unrelated parties, and was not incurring further liabilities. I am not persuaded that that is so.

“Within this 18-month period Mr Henderson, by his own admission, has incurred a further liability (standing at $10.5 million as at 10 May) under a guarantee of an advance to the purchaser of Victoria Park Market. It may be that Mr Henderson justifies that further guarantee on the ground that there had been a reduction in indebtedness of a similar amount by sale of the Victoria Park Market assets (so that there was no deterioration in his position overall) and the other parties were fully aware of the circumstances, but that does not detract from the fact that he is still engaging in new commercial activities which are potentially the subject of challenge. On balance, I consider that this aspect counts against Mr Henderson.

“The second factor influencing the policy is that the prospects of recovery for creditors are inevitably hindered by the passage of time…..

“The second general element of public interest concerned Mr Henderson’s non-compliance with the Insolvency Act, leading to dismissal of his first proposal…..

“My overall conclusion is that had BankWest been served with the proposal as it was entitled to be, and hereafter attended the creditors’ meeting, it would have been able to defeat the proposal. The position is even more certain if one includes the Downer debt. This is therefore a case where the non-notification of those 2 creditors deprived them of the ability to defeat the proposal. They did not just lose an opportunity to influence how the vote turned out by contributing to discussions at the creditors’ meeting….

“There seems little doubt, based on the history of this matter to date, that resolution of the disputed threshold issue (whether as a preliminary question or as part of a substantive hearing) is still going to require considerably more time.…. The significance of these disputes is that the creditors’ acceptance of the proposal by the requisite majorities cannot be taken to be certain…..

“I also regard it as significant that a number of companies in which Mr Henderson had an interest voted in support of the first proposal, but have since been placed in liquidation. It can be assumed that the liquidators of those companies (who have a responsibility to all creditors) see greater benefit to their creditors in an adjudication than in a pro rata share in the $1.5 million pool (even though the secured creditors would also be entitled to share in any recoveries).

“In summary, although at face value there is a threshold level of support for the proposal, and a real prospect of a modest dividend of just over 2.5c:$1 of debt for about half of the judgment creditors (after taking out the non-participating secured creditors), that apparent threshold may prove illusory. Against that possible benefit, there is a substantial body of creditors (either 7 or 8 having aggregate debt of about $31-37.5 million, depending on the treatment of Downer’s claim) who are strongly opposed to the proposal, and who, no doubt in light of the modest dividend available under the proposal, prefer the option of an investigation into recoveries as part of an adjudication.

“There is no question that Mr Henderson’s interests will be affected by declining the application for adjournment on the basis of public interest considerations. However, if so, he must carry the responsibility for that. He had the opportunity to put his proposal properly to all creditors. In respect of BankWest, he elected neither to give notice as required under his contractual arrangements with BankWest nor to follow a course that he said that he agreed separately (delivery to a local representative of BankWest).

“I am unable to say on the material before the court on this application whether this was deliberate (to avoid BankWest’s participation at the meeting on the first proposal) or oversight. The point is that it was within his power to do it properly. I take the view that this aspect weighs against an adjournment.

“The last factor advanced by the Commissioner of Inland Revenue, BankWest & Downer was that they will be prejudiced by further delay. They point to the evidence of substantial increase in debt since the first proposal: the total value of debt voted at the first meeting was $105.6 million and this had risen to $128.3 million voted at the second meeting. A significant amount of the increase is likely to be interest….

“BankWest also contends that it is prejudiced in that it has brought a petition for Mr Henderson’s bankruptcy in Australia, but that petition has been adjourned pending the outcome of the commissioner’s application for adjudication.

“All of these creditors also say they will be prejudiced by having to incur yet further costs in having to address a second application for approval, whether by way of a separate question or a hearing of all aspects of the application.

“I consider that there is an aspect of prejudice, counting against the adjournment, arising out of the fact that this is a second proposal. The legislature can be taken to have anticipated the prospect of some prejudice by making provision for proposals in part 5 of the Insolvency Act. However, Mr Henderson has already had the benefit of one application. The creditors should not be penalised further for his failings on that application. In my view this factor counts against adjournment.”

Associate Judge Abbott said the critical aspect of this case was that this was the second application. Issues could be determined by an application for approval, but at the cost of further delay: “If this was the first application, that would be the course I would follow. However, Mr Henderson has already been given that opportunity by the court, has failed to take advantage of it and is now seeking yet further indulgence. In that context, and in circumstances where there is doubt as to whether the statutory threshold for creditor acceptances has in fact been met – and even then by the barest of margins – public interest considerations must receive greater weight.

“Delay, and the need to determine bankruptcy applications promptly to avoid risk and enhance prospects of recovery, are compelling public interest factors in the present case…. There is no reason to believe that either side will be willing to make concessions to achieve an early resolution.”

Earlier stories:

7 June 2011: Update: Insolvent Henderson explains guarantee for new Victoria Park Market developer – and arguments over his bankruptcy continue

19 April 2011: Update: Henderson gets further bankruptcy reprieve

19 April 2011: Henderson gets bankruptcy reprieve

18 April 2011: Henderson goes into bankruptcy hearing with narrow creditor majority

12 April 2011: Henderson defers creditors’ meeting

31 March 2011: Henderson holds Inland Revenue at bay with insolvency scheme

11 March 2011: Judge rejects Henderson insolvency scheme, new scheme to be filed

18 February 2011: Judge reserves decision on Henderson debt proposal

18 February 2011: Sydney project pulled Henderson down, but IRD says he was failing in boomtimes and Bankwest says creditor count wrong

22 September 2010: Adjourned hearing leaves Henderson unbankrupted, uncompromised

11 September 2010: Building consents imminent for Victoria Park Market redevelopment under new ownership

28 June 2010: Victoria Park Market sale nears settlement, August redevelopment start

29 April 2010: Auckland developer David Henderson wins insolvency scheme support

25 March 2010: Henderson creditors have first meeting on debt compromise scheme

22 March 2010: Henderson debt $166 million, offers $1.5 million on half of it

9 February 2010: Henderson wins reprieve from bankruptcy with last-minute scheme

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Attribution: Judgment, story written by Bob Dey for the Bob Dey Property Report.

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Judge questions value in cash-strapped Official Assignee’s request to extend Kim Spencer bankruptcy

Published 8 June 2011

Justice Mary Peters reserved her decision yesterday on whether to allow the Official Assignee’s application to extend land developer Kim Spencer’s second bankruptcy by another 3 years.

The judge closely questioned Crown counsel Nick Malarao on why any extension should be granted when the under-resourced Official Assignee had done little in the past 2 years to advance its investigation of Mr Spencer’s affairs.

She gave Mr Malarao until 2pm on Friday to file a further affidavit as to the assignee’s future intentions.

Mr Malarao began a public examination of Mr Spencer in the Auckland High Court yesterday by asking him a question out of page 1245, volume 6, of the hefty document file relating to the bankruptcy.

After a morning of questioning, some going back to whether money that disappeared during his first bankruptcy ended up in his wife’s family trust, Mr Spencer left the witness box and carried on out the door of the court. Called back by Justice Peters, Mr Spencer turned down an invitation to stay to hear Mr Malarao’s submissions, which continued into the late afternoon.

“I don’t really understand it,” Mr Spencer told the judge, adding that his lawyer wasn’t there to help, so he left.

A couple of hours further on, Justice Peters told Mr Malarao: “The point I’m really interested in hearing is where to from here if the term of the bankruptcy is extended. Is that covered in here (the 6 volumes of documents)?”

Despite the large volume of paper amassed on Mr Spencer’s affairs, Mr Malarao conceded that investigations hadn’t proceeded as well as they ought to have – and hadn’t proceeded “for the last couple of years” – because the Official Assignee was short of money.

Justice Peters: “He hasn’t been asked any questions for 3 years now. It’s difficult to say he’s not co-operating until today. It would different if the Official Assignee were writing to him every 6 months and getting ‘I don’t recall’ or no answers back…..

“Some constructive purpose has to be served in extending the duration of a person’s bankruptcy, either because everything they touch has a history of turning to dust, or there’s an anticipated course of action by the Official Assignee of where this is going to go.”

Mr Spencer was bankrupted the first time from 1997-2000 and again on 1 August 2007. Ordinarily, under an automatic discharge, he would have been released from the second bankruptcy 10 months ago.

On the way through questioning, Mr Malarao established that Mr Spencer lived on a farm at Vipond Rd, just off State Highway 1 between Te Hana & Topuni north of Wellsford, which was managed by his partner, Robyn Todd.

The farm’s owner was Honk Cows Ltd (now called TG Cows Ltd), a company in the Honk group of Andrew Tauber & Paul Webb.

Mr Spencer said he had “probably got the longest hours and I would be classed as the biggest lackey – fix things, milk cows, do whatever” – but he wasn’t paid: “Mr Tauber will not employ me whilst I’m bankrupt. He loans me money until I am no longer bankrupt.” Mr Spencer said those loans amounted to $4000/month, without a written contract.

Mr Malarao tried to establish that Mr Tauber’s ownership of the farm – and of vehicles & boats there – was a front for Mr Spencer until his bankruptcy was over.

But Mr Spencer responded: “I had purchased the farm and couldn’t settle it because I went bankrupt and Andrew bought it from the original owner, Skip Whitmore.” Mr Spencer said his purchase would have been “the same way I would always buy, a partner put the funding up. I did a lot of deals with (lawyer) Kerry Knight & (property developer) Bob Wickham. Andrew already knew the farm because he’d bought neighbouring properties.”

When Mr Malarao once more put it to Mr Spencer “that Mr Tauber is just fronting it and will put it back to you”, Mr Spencer retorted: “Well that’s just laughable, when Westpac (one of Mr Spencer’s 2 main creditors) have backed him. And they know I live there. Andrew’s a seriously hard businessman, you don’t get a free ride out of him.”

In submissions, Mr Malarao told Justice Peters: “Mr Spencer’s lifestyle doesn’t appear to have been greatly affected by his being bankrupt. He seems to have access to properties, vehicles, and the fact of bankruptcy doesn’t seem to have been hindering him.”

Justice Peters: “That’s the Official Assignee’s position but you didn’t put it to him.”

Mr Malarao said the interests of creditors was a factor that weighed against discharge. Mr Spencer’s estate owed $4.8 million and his creditors – primarily Westpac, Auckland Finance Ltd and KordaMentha, the receivers of a Spencer company, Phantom Charters Ltd, which owned one of the boats – hadn’t had any dividend.

On the public interest, Mr Malarao said: “The reference there is to the 3 convictions (over Mr Spencer’s visit to Australia in 2008 without notifying the Official Assignee), the overwhelming view that he doesn’t respect any of the restrictions the bankruptcy has placed upon him. Furthermore, there is more than a suspicion that a lot of the assets Mr Spencer has had involvement with seem to have ended up in Mr Tauber’s companies and it doesn’t equate with happening legitimately, and this is something the Official Assignee wants to investigate further…..

“There have been some recoveries in the estate of Susan Spencer (his ex-wife) which will flow back to the Kim Spencer estate. The Official Assignee’s been put to considerable expense. There have been 3 applications for asset preservation orders, but nonetheless the assets all ended up in the Honk companies.”

A feature of Mr Spencer’s business life was that he signed personal guarantees although he didn’t have any assets those guarantees could be enforced against.

Justice Peters: “Wouldn’t a bank obtain a statement of assets & liabilities? There’s no evidence of whether Mr Spencer gave an accurate account of his personal affairs or not.”

Mr Malarao said the commercial community needed protection from Mr Spencer’s type of behaviour: “It’s evident from the Official Assignee’s private examinations and his evidence today there is a lack of insight into the trouble his activities cause. It doesn’t seem that he thinks he’s done anything wrong and it doesn’t seem he’s going to change his ways when he comes out of this bankruptcy.”

Justice Peters: “There’s absolutely no evidence of that at all. He said he was going to become a farm manager, which he obviously knows a lot about. There’s no evidence when he’s discharged he will return to property development.”

In her wrap-up of the day’s proceedings, Justice Peters said: “If the reality is the Official Assignee doesn’t have the resources, then I think it would be better to confront that reality now. On the other hand, if it’s to take steps in the short term, getting documents, examining him again… if there was evidence as to that, I would consider it relevant and would look at it….

“If it is extended it will be on a definite timetable of what the Official Assignee’s proposing. It won’t be on ‘If the OA gets x time, steps will be taken’. And if it’s not going to do that, it needs to be said now. You’ve got until 2pm on Friday to serve a further affidavit as to the assignee’s future intentions.”

Earlier stories:

23 October 2008: Spencer gets 120 hours of training time for Insolvency Act breaches

22 September 2008: Spencer seeks discharge after going to Australia twice while bankrupt, sentencing deferred

16 July 2008: Equinox takes control of Spencers’ Pah Farm project

U: The names behind the action, the week to 6 July 2008, part 5, Susan Spencer bankrupt

U: The names behind the action, the week to 5 August 2007, part 1, Kim Spencer bankrupt

20 July 2007: Kroon & Weller not guilty in Spencer kidnap trial

29 June 2007: Davison uses old case to target Spencer credibility in Pakiri kidnap trial

26 June 2007: Jury told of Spencer’s beating at Pakiri at start of kidnap trial

9 September 2005: Kroon accused of kidnapping Spencer, and financier gets $4 million judgment against Spencer

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Attribution: Court hearing, story written by Bob Dey for the Bob Dey Property Report.

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Update: Insolvent Henderson explains guarantee for new Victoria Park Market developer – and arguments over his bankruptcy continue

Published 1 June 2011

Updated 7 June 2011

The High Court was told on 31 May insolvent Auckland property developer David Henderson had signed a personal guarantee for a loan to the company which bought Victoria Park Market from him, and where he is working as project manager on the redevelopment.

This guarantee was on a loan from Number 120 Ltd, a Westpac NZ Ltd company, which had risen from $49.6 million to $63 million before falling back to $60 million on a creditor’s claim form presented in Mr Henderson’s second debt-compromise proposal.

The sharp & unexplained increase in this loan was one of the reasons cited by BankWest counsel Daniel Hughes for opposing Mr Henderson’s new insolvency proposal. Counsel for Mr Henderson, Daniel Grove, later explained that the increase wasn’t all an interest charge but included further advances.

Update: That matter wasn’t taken further in court. However, Mr Henderson said later: “Number 120 didn’t advance any money. It’s just a continuation of a guarantee for the old advance (from Westpac to his company). When that property was sold they would not release their mortgages. So it continued under my guarantee.”

Second update: As the argument over Mr Henderson’s second proposal began, Associate Judge Jeremy Doogue issued a costs order against Mr Henderson for the hearing of his first proposal last September and in February.

Associate Judge Doogue made an order for costs on a standard 2B basis (without setting out the dollar figures) against Mr Henderson, as the applicant, but rejected a claim for augmented costs because some creditors (notably BankWest) hadn’t been served properly. The judge also rejected claims by BankWest & Inland Revenue for costs orders against the scheme’s trustee, accountant David Ross.

BankWest, a creditor arising from its role as financier for a Sydney project which collapsed as the global finance crisis hit, didn’t receive the documents for Mr Henderson’s first insolvency proposal of $1.5 million to be paid over 3 years, while a second company for which he’s acting, Downer Construction Ltd, was excluded from voting on both proposals.

In court on 31 May, Mr Hughes told Associate Judge David Abbott that Associate Judge Doogue had found, in his decision to decline the first proposal, that if BankWest’s debt had been counted the proposal would have been defeated.

When it came time for the second proposal – essentially the same thing, but with different numbers on creditors’ proofs of debt – BankWest’s claim was reduced from $A26 million to $A13 million, the result of sale of the Sydney property.

Mr Henderson squeaked home on the second proposal by a margin of 0.68% over the required 75% threshold by value of creditors voting on it. BankWest and Inland Revenue continue to oppose any proposal Mr Henderson puts up, but yesterday’s hearing before Associate Judge David Abbott was not, after all, about the merits of the scheme but about 2 adjournment proposals.

Mr Grove opposed Inland Revenue’s application for an adjournment, sought to allow more time to present evidence and consider votes at the creditors’ meeting. In the second application, Inland Revenue counsel Paul Murray sought a trial on a preliminary question: whether or not the voting threshold requirements were met at the second creditors’ meeting in April.

Associate Judge Abbott said he would resolve the first issue first – Inland Revenue’s application for an adjournment – and reserved his decision on that. Once decided on that, he said he’d rule on the application for trial of the preliminary question, which Mr Murray said would save time in the long run.

Mr Henderson’s first proposal was considered by creditors in March 2010. He’s developed numerous apartment buildings around Auckland but redevelopment of Victoria Park Market was his last project. His company, Kitchener Group Ltd, bought the market for $14.1 million at the beginning of 2004. In 2007, Mr Henderson said he was assuming the role of development manager for it, instead of being the boss of a company working on the project. The $200 million project would include more than 100 freehold apartments, enhanced retail & restaurant facilities and become “an attraction where locals & tourists alike shop, live, work & play,” he said.

In Mr Henderson’s first insolvency proposal, Westpac was listed as his second-biggest creditor, owed $31.3 million (18.8% of acknowledged debt). The bank agreed to support the new market project.

The property was sold last year to a consortium of investors under the entity Victoria Quarter No 1 Ltd for about $25 million, half of a package which also contained other assets. Victoria Quarter No 1 is fronted by director & shareholder Mike Toepfer, a lawyer who moved to Wanaka this year after 17 years at Hesketh Henry in Auckland, where he led the commercial property team.

Earlier stories:

19 April 2011: Update: Henderson gets further bankruptcy reprieve

19 April 2011: Henderson gets bankruptcy reprieve

18 April 2011: Henderson goes into bankruptcy hearing with narrow creditor majority

12 April 2011: Henderson defers creditors’ meeting

31 March 2011: Henderson holds Inland Revenue at bay with insolvency scheme

11 March 2011: Judge rejects Henderson insolvency scheme, new scheme to be filed

18 February 2011: Judge reserves decision on Henderson debt proposal

18 February 2011: Sydney project pulled Henderson down, but IRD says he was failing in boomtimes and Bankwest says creditor count wrong

22 September 2010: Adjourned hearing leaves Henderson unbankrupted, uncompromised

11 September 2010: Building consents imminent for Victoria Park Market redevelopment under new ownership

28 June 2010: Victoria Park Market sale nears settlement, August redevelopment start

29 April 2010: Auckland developer David Henderson wins insolvency scheme support

25 March 2010: Henderson creditors have first meeting on debt compromise scheme

22 March 2010: Henderson debt $166 million, offers $1.5 million on half of it

9 February 2010: Henderson wins reprieve from bankruptcy with last-minute scheme

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Attribution: Court hearing, story written by Bob Dey for the Bob Dey Property Report.

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Liquidators cancel Western Pacific Insurance policies

Published 27 April 2011

All insurance policies held by Western Pacific Insurance Ltd have been cancelled after liquidators David Ruscoe & Simon Thorn (Grant Thornton NZ Ltd) said they were unable to sell, transfer or assign the business.

The liquidators of the Queenstown-based insurance company said in a letter to policyholders they’d determined Western Pacific was unable to provide insurance cover to policyholders: “Under section 269 of the Companies Act, we disclaim the insurance policies as onerous property, the effect of which is the cancellation of all policies immediately. Our priority is to ensure that reinsurance with offshore companies can be collected. Once we confirm this amount, we will be in a better position to progress the individual claims.”   To help policyholders find alternative insurance cover, the liquidators have entered into a preferred supplier agreement with Tower Insurance Ltd: “Under this agreement, Tower has agreed to consider offering cover to all New Zealand-based Western Pacific policyholders at current market rates. Normal underwriting criteria will apply.”   The liquidators hope to report again by 31 May.

Western Pacific (Jeffrey McNally, Melbourne; & Graham Smolenski, Queenstown) went into voluntary liquidation on 1 April.

The company’s last accounts filed at the Companies Office, for the June 2009 year, show gross premiums fell from $9.3 million in 2008 to $7.2 million and the company’s net operating surplus fell from $644,000 to $414,000.

Mr McNally has spent 30 years in insurance. He opened his first brokerage in 1984, selling it in 1991. In 1992 he began his focus on difficult business & Asia, opening Allied Asia Consultants Pte Ltd in Singapore.

He established Allied Asia Insurance Consultants Ltd in Hong Kong in 1993. Under its new name of Entertainment Insurance Brokers (HK) Ltd, it’s become a specialist in contingency & special risks, operating throughout Asia as both a retail & wholesale broker. In 1999, he established Allied Asia Underwriting Agencies in Australia, which targeted difficult-to-place public liability risks.

Mr Smolenski is best known for establishing the Millbrook resort near Queenstown. Before that, he was involved in creating the Nugget Point resort. He’s a director of Gibbston Valley Wines Ltd, GL Smolenski Investments Ltd, NZSki Ltd, Queenstown Securities Ltd and a long list of Millbrook-related companies.

Earier story: U: The names behind the action, the week to 10 April 2011, part 1, Western Pacific Insurance closes

 

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Attribution: Lquidators’ release, story written by Bob Dey for the Bob Dey Property Report.

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Henderson gets bankruptcy reprieve

Published 19 April 2011 at 1.22pm

Auckland property developer David Henderson won a further reprieve from bankruptcy today, with a decision by Associate Judge David Abbott to adjourn to the week of 30 May for clarification of preliminary issues on Mr Henderson’s second compromise proposal.

Among issues to be canvassed at that adjourned hearing in the Auckland High Court is whether Mr Henderson managed to pass the threshold of 75% by value of creditors voting on the proposal. The count at yesterday’s creditors’ meeting gave Mr Henderson 75.68% support but the proof of debt of one opposing supporter, Downer Construction NZ Ltd, was rejected. The Downer debt exceeds $3 million.

                                                                      

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Attribution: Court hearing, story written by Bob Dey for the Bob Dey Property Report.

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