Cowboy Liquidators

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.

  • Mr_Blobby

    In my experience if you have a debtor who is in trouble, it
    is best to come to an arrangement early. Yes you will take a loss, but it is
    better to get something rather than nothing. It may also help them stay in
    business if they are a good operator hit by circumstances out of their control.

  • Bunswalla

    Even the more “reputable” liquidators are gouging for all they’re worth. A client of ours in Australia has gone into voluntary liquidation and we received some mail from the liquidators (one of the Big 5). The hourly rates they charge are ridiculous – from A$625 plus GST and disbursements for a senior gouger, down to A$195 plus plus for a graduate less than one year out of uni.
    The sickest is for “Advanced Secretarial skills” at A$185 plus plus per hour – and to show how efficient they are at gouging, they sent us the exact same document twice on the same day to the same address. And we only have one account with them so no reason for the double-up other than inefficiency and/or make-work to justify the gouging.
    Total estimated costs to administer the receivership? Just A$200k per week, plus GST and disbursements. I’m definitely in the wrong business…

    • Dave

      Buns. I client of ours was liquidated, the liquidator traded the company and sold it off in parts, end result, Liquidators fees of around 600K. They recouped enough to pay around 90 cents in the dollar, but after their fees, it was around 44 cents in the dollar. Very professional and efficient, and great people to deal with, but their fees were up there. To this day we cant understand why their shareholders Liquidated, would have been better to do a creditors arrangement.

  • surfisup

    Who audits the liquidators?

    It seems to me, liquidators have a license to strip the remaining flesh from the bones of of failed companies — ahead of all creditors.

  • ThreeMonkeys

    What ever happened to Garry Whimp from McDonald Vague & his trusty sidekick Matthew Blomfield? Wasn’t this their area of expertise?

  • Stuarts.burgers

    Is this the same Mr Norris. Who had an Insurance. Brokerage in Hamilton

  • kehua

    Jeez Cam, lay of us Cowboys, the man is just a dirty stinking thief and more pertantly a crooked, dishonest liquidator. Nothing to do with good ol cowboys at all.

  • cows4me

    Sounds like Mr Norris needs liquidating . He should probably be grateful he lives in NZ , anywhere else , well we won’t go there.

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