Georgina Bond has an article at NBR about dodgy liquidators. I can tell you that from a recent investigation that the activities of numerous liquidators have come to my attention. I agree with Georgina that something needs to be done to rein in the predations of these rapacious liquidators.
The theft conviction of Nelson liquidator Pat Norris demonstrates why the laws regulating insolvency practitioners need reform, lawyers suggest.
Patrick Dean Norris, 55, is perhaps best remembered for the lurid headlines of two years ago when he made intimate recordings of his ex-wife and put Pink Batts in her underwear drawer.
Last week, the former Kawerau mayoral candidate was found guilty of theft by a person in a special relationship after a two-week, judge-alone trial at Nelson District Court.
Norris will be sentenced later this month.
The conviction relates to allegations he banked $80,900 from the liquidation of Auckland-based Astra Enterprises into the trading account of his company Norris Management Services and used the money for personal and business expenses.
The Crown said there was no evidence any creditors of Astra Enterprises had been paid.
Judge Michael Behrens QC found Norris “engaged in a blatantly dishonest course of action” – instructing his staff to create invoices for an amount to cover at least $80,000 after the Companies Office visited to inspect the Astra file.
Norris, who represented himself at the trial, has indicated he is likely to appeal the decision.
One lawyer I spoke to recently told me of one liquidator whose modus operandi is basically stand over where they confront directors, lawyers, accountants essentially who ever they identify as a potential target and demand cash/assets/recompense for turning a blind eye, and failure to do so will result in them visiting the Police to lay a complaint.
[I]t is Bell Gully’s view a person convicted of a dishonesty offence should not be permitted to act again as a liquidator of a company.
“This is particularly so where the dishonesty occurred in the course of a liquidation, such as here, where Norris stole funds from the company and its creditors,” Mr Tingey says.
The Insolvency Practitioners Bill, before Parliament, would redress this by disqualifying any person convicted of a crime involving dishonesty from being a registered insolvency practitioner, unless the court orders otherwise.
Yet there will still be deficiencies, Mr Tingey says.
“The bill only introduces a negative licensing regime, excluding people from acting as a liquidator if they are disqualified in some way. It does not introduce a positive licensing regime, requiring minimum qualifications for an individual to act as a liquidator.
“As a result, it would not appear to prohibit someone such as Mr Churchill from acting as a liquidator. Indeed, it would appear to allow Mr Churchill to register and hold himself out as a registered insolvency practitioner,” Mr Tingey says.
“The label ‘registered insolvency practitioner’ implies that the practitioner meets a minimum standard of proficiency, when he or she may not be qualified at all.”
The Norris case illustrates why the bill should contain a positive licensing regime, with minimum standards for individuals to be able to hold themselves out as registered insolvency practitioners, he says.
It is real wild west stuff out there. As I said I have come across numerous examples since picking the scab off the industry. There is a real rapaciousness out there and I have seen evidence where company directors with relatively small cashflow issues have been picked clean after seeking restructuring and insolvency advices from the cowboy operators.