Published 14 April 2010
Metropolis developer Andrew Krukziener has fought off a Companies Office attempt to ban him from being a director, says he has won all but one of his tussles with Inland Revenue over years of what he describes as persecution, and yesterday got an IRD attempt to bankrupt him adjourned after he filed a debt-compromise proposal.
The banning attempt, in 2006, ended with a commendation for his behaviour as a director from Companies Office deputy registrar Peter Barker.
The bankruptcy application was over an undisputed debt of $576,800, arising from what Mr Krukziener said was a “loans-is-income” case from 1991-2002 – any money he borrowed from his trust was regarded as income in his name. On top of that, Inland Revenue had applied penalties & interest from 1991 and then every year.
In court, Inland Revenue counsel Nick Malarao argued that Mr Krukziener was plainly insolvent, had failed to set aside the bankruptcy notice on grounds that the Commissioner of Inland Revenue had abused his office, had breached his duties as a company director, had engaged in tax avoidance and it was in the public interest that he be bankrupted immediately because of the commercial risk he posed.
Mr Malarao said the payments for Mr Krukziener’s debt compromise were said to be guaranteed by a trust, but there was no independent evidence of the financial position of that trust. Mr Krukziener had provided guarantees to his creditors before, but this had proved of little value to them.
Mr Malarao added that Mr Krukziener had “restructured his affairs in a way that his personal asset position is very bare, so the appropriateness of giving guarantees does come into question”.
Mr Krukziener’s lawyer, Lawrence Herzog, said the debt compromise covered debts estimated at $50 million, but 64% of that was secured so the 0.7c:$1 payment estimate was likely to be well short of actual payment. Mr Herzog said the figure was more like 2.7c:$1 – and Mr Krukziener said, back in his office after the hearing, the eventual payment was likely to be in double figures. He said most of the eventual debt would be tax, but not the $6.7 million claimed in the court hearing.
Mr Krukziener is proposing a $250,000 payment in 2½ years, followed by 2 payments of $50,000 over the next year.
Mr Herzog told Associate Judge Roger Bell the proposal had indications of support from 75% of creditors and would go to a meeting on Monday 31 May. He also told the judge Inland Revenue had no evidence of tax avoidance, was completely wrong about breaches of director’s duties, and that Inland Revenue’s efforts to bankrupt Mr Krukziener – when it was normal to adjourn for a proposal to be put – could be seen as an attempt to prevent Mr Krukziener continuing with an appeal before the Taxation Review Authority, due to be heard on 10 June.
The judge adjourned the matter until Tuesday 8 June at 11.45am, to allow the creditors’ meeting to proceed.
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Attribution: Court hearing, banning documents, interview, story written by Bob Dey for the Bob Dey Property Report.