Who do creditors owed money from John Clancy’s various liquidated companies contact?

Link toPDF file: Unsecured Creditors Claim Form

All creditors, including contractors and subcontractors owed money from John Clancy’s various liquidated companies,  need to URGENTLY contact the appointed Liquidator(s) to file a claim on the appropriate creditor’s application form (see link above and more below). [Read more…]

Dave Henderson fails to stop liquidation bid

The High Court has dismissed a bid by one of David Henderson’s companies now directed by his wife to stop liquidation proceedings.

Wellington accountant Robert Walker, the liquidator of several companies in the Henderson group, has started court action to liquidate Castlereagh Properties Ltd, of which Henderson was a shareholder until June 27, 2010.

The shares are now held by FTG Trustee Services Ltd, a company directed by Henderson’s wife Kristina Louise Buxton, but with the shareholding in Henderson’s name.

Henderson was bankrupted on November 29, 2010 and remains a bankrupt. Walker has also issued bankruptcy proceedings against Buxton.

She is the sole director of Castlereagh, which applied to the High Court at Christchurch last month to have the liquidation action stayed. Associate Judge Rob Osborne rejected the bid in a judgement this month. [Read more…]

Subbies await Supreme Court call on voidable transactions

Subcontractors are calling for the Supreme Court to end a nine-month wait for a decision on the ability of liquidators to claw back payments made by insolvent companies to contractors.

In mid-2013, the Court of Appeal ruled that when companies went bust, liquidators could claw back payments made by an insolvent company up to two years before its collapse, a practice known as voidable transactions.

This could include where a sub-contractor had been paid for work they had completed.

Shocked contractors appealed the decision to the Supreme Court.

The Supreme Court heard the case in March last year, but no decision has been published.

Graham Burke, president of the Specialist Trade Contractors Federation which represents more than 5700 contracting firms, said: “While this decision is pending, thousands of businesses remain in a no-man’s land with regard to voidable transactions.”

“Under the Court of Appeal ruling, any service you supply and are paid for afterwards is a voidable transaction.

“That affects every business in New Zealand which provides goods and services on account. However, the building trade is particularly aware of this because there are more insolvencies in the construction sector than in other sector.”

Voidable transactions are intended to ensure all creditors of insolvent companies are treated equally, but Burke said funds clawed back from subcontractors ended up being paid out to pay liquidators’ fees, employees of the company that went bust, and the Inland Revenue.

Contractors, who are generally unsecured creditors, are at the bottom of the heap when it comes to being paid in a liquidation, Burke said.

“The current ruling means that contractors who complete a contract properly and have paid their suppliers and staff, cannot have certainty that payments they have received will not be recovered,” Burke said.

Until the Court of Appeal decision, it had been thought that providing a contractor was paid for work done, then they were safe from having money clawed back.

No longer being able to rely on that created a great deal of uncertainty, and was upsetting business planning, he said.

“This makes it difficult for small business to plan to invest and grow,” Burke said.

“The contracting market is currently buoyant but there have been some high profile insolvencies in recent years. The issue of voidable transactions needs to be resolved so businesses can make decisions about investing in areas such as new equipment, training staff and expanding their businesses to meet the growing demand.”

If the Supreme Court does not reverse the Court of Appeal’s judgement, the federation would campaign for politicians to draft new laws.

“If we don’t get a favourable decision, we need a political one,” Burke said.

“It’s not only about our industry. The whole economy needs certainty.”

The Court of Appeal judgement “flies in the face of natural justice”, he said.

Taupo-based Mike Field, owner of Fences & Kerbs, was one of the contractor companies involved in the Supreme Court case.

Fences & Kerbs did concreting and steel foundation work on a pipeline being built for Contact Energy at Wairakei by Contract Engineering in 2010, and was paid $58,000 in two instalments between August and September of that year.

Contract Engineering went into liquidation in July 2011 and its liquidators served a notice to set aside the payments to Fences & Kerbs.

Field’s case, grouped together with two others, were the subject of the Supreme Court hearing, and if the Court of Appeal decision is allowed to stand, Fences & Kerbs will have to pay back the $58,000.

“What I have decided is they can all go to hell as far as I am concerned,” Field said.

“The only hope we have got is that the Supreme Court likes sticking it to the Court of Appeal. It’s over-turned that many decisions.”

The Supreme Court is currently closed and unavailable for comment.

Source

Stuff News Businessday. Story by Rob Stock. Thursday January 15, 2015.

http://www.stuff.co.nz/business/better-business/65065594/Subbies-await-Supreme-Court-call-on-voidable-transactions

Prosecution of company directors in breach of s. 261 of Companies Act 193

Under s. 261 of the Companies Act 1993 a liquidator of a company has powers to obtain documents and information from a former director of the failed company. Failure to provide that information to the liquidator can result in the director being prosecuted and if convicted of an offence under s. 261, he or she “liable to a fine not exceeding $50,000 or to imprisonment for a term not exceeding 2 years”.

If the company director has been adjudicated as a bankrupt at the time of sentencing a judge would be compelled to impose a prison sentence rather than impose a fine. If the offending involved long-term and systematic refusal to supply documents to a number of liquidators involving multiple companies of which he/she had been a director, and the non-compliance showed a pattern of flagrant disregard for the law, a judge would no doubt be compelled to impose a maximum sentence. For to do so would be in the public interest because the law has a pedagogical role in addition to a punitive element designed to bring offenders to their senses regarding the rule of law as it prescribes and defines criminal behaviour.

Section 261 of the Companies Act entitled “Power to obtain documents and information” includes: [Read more…]

David Ian Henderson: Bankrupt Christchurch property developer v. the Insolvency and Trustee Services

Introduction

Liquidation is a process where the assets of a company that cannot pay its debts, are distributed by a liquidator or by a Crown authority called the Official Assignee (AO). The AO only deals with liquidations where it has been appointed liquidator by the court or, in certain circumstances, by itself. A company is placed into liquidation when it is unable to pay its debts. This is done voluntarily or by a court order. A liquidator is appointed to investigate the company’s financial affairs, establish the reason why the company failed, investigate possible offences, and identify and sell any assets to help repay creditors. Officers of the company must assist the liquidator by providing information and answering questions. 

Failure to assist the Official Assignee is a serious offence and may lead to prosecution. It is an offence for a director to conceal or remove property with the intention of preventing or delaying the Official Assignee from taking custody of it, or to destroy, conceal or remove records or other documents. Penalties can include fines and imprisonment.

Bankruptcies are managed by the AO and normally last for three years. Bankrupts are unable to direct a company and are not allowed to manage a business without the OA’s consent. [Source: http://www.insolvency.govt.nz/]

The Society for Promotion of Community Standards Inc. is concerned that the ability of liquidators serious about fulfilling their statutory duties to investigate and report possible offences by company officials against the Companies Act 1993, the Financial Reporting Act, the Securities Act and the Insolvency Act 2006; are being undermined and thwarted by a number factors including: [Read more…]