Bankruptcy

Good job, ratbag bankrupt loses his inheritance to his creditors

A ratbag bankrupt, who has been fighting to keep his inheritance has lost his court case and the creditors will now get paid as a result of the Official Assignee doing their job for once.

A man whose parents died in a car crash has lost his fight to keep his inheritance out of the pockets of his creditors.

Warren Sutton lost his appeal in the High Court to redirect his inheritance to his children. He was an undischarged bankrupt at the time of his father’s death.

The inheritance was that of prominent Taranaki couple Ern and Nancy Sutton, both 83, who were killed in May 2012 when their car was crushed by metal pipes which fell from a truck on State Highway 3 near Motunui.

The estate was to be divided between the Suttons’ three living children, one of whom was property developer Richard Warren Sutton, known as Warren Sutton.

Warren Sutton was described in court documents as “a businessman who has experienced highs and lows.”    Read more »

Alarming incompetence at the Insolvency Service

Rodney Hide relates a case of dreadful incompetence at the Insolvency Service:

My mate Dave Henderson (“Hendo”), nonetheless, decided to have a crack and took the Official Assignee to court. Hendo has a shocking catalogue of failings to choose from but was determined to chew off just a small corner. It was very wise of him. He had to take the case himself. And he’s no lawyer, having failed every paper at stage one law.

The Official Assignee flew down from Hamilton a hot-shot barrister well-versed in insolvency law and another to observe from the Hamilton Crown Solicitor’s office. It was David and Goliath.

I covered the case from the media bench. And also served as paparazzi.

Hendo’s case was simply the wrongness of the Waikato Region Official Assignee, Les Currie, in refusing his application to travel overseas.

Hendo lost. But in his June 12 judgment, Associate Judge Osbourne found the following:

First, that the Insolvency Service’s Guidelines reflect the 1967 Insolvency Act, not the 2006 Act, and ignore the 1990 New Zealand Bill of Rights Act. Think about that. That’s the guidelines for staff. The Official Assignee’s own guidelines don’t follow statute. It should not be surprising that Official Assignees don’t.

Second, “Mr Currie clearly proceeded upon an understanding of the law that requires a travel decision to be based on the proposition that a bankrupt should not in the normal course of events go out of New Zealand during bankruptcy in the absence of a ‘good reason’.”     Read more »

Rodney Hide on insolvency and the wild west of the industry

Rodney Hide writes in the NBR of the gobsmacking arrogance of the Official Assignee, the lack of accountability and the general parlous state of insolvency.

I have hitherto reported the Official Assignee of New Zealand, Mandy McDonald, spending a gobsmacking $835,000 administering Jamie Peters’ bankruptcy.

I wanted to find out how she spent the money, first, to tell astonished NBR readers; second, to make an uninvited report to the minister; and third, to complain to the Auditor General.

I made a s.227(2) application under the Insolvency Act 2006 to inspect the Assignee’s accounting records.

I had a back-and-forth with a number of staff and finally received a “statement of receipts and payments” from Robert Rendle, Lead Business Registries, Legal Services, Ministry of Business, Innovation and Employment. The statement was three lines long. Now remember, the Official Assignee excused the $835,000 cost because Mr Peters’ bankruptcy was “complex.” And here it was, “sale of assets: $388.35; legal fees: $288.79; service of documents: $99.56.” That’s it.

That three-line statement of receipts and payments perfectly illustrates the lack of transparency of the New Zealand Insolvency Service.

The Official Assignee tells us how she spent the $388.35 she raised from Mr Peters’ estate but not the $835,000 plus of taxpayers’ money she spent getting it. Our spooks and spies are more forthcoming than the Official Assignee. And less intrusive.

Read more »

Ratbag Rhys Coffin says he will pay outstanding wages by Friday, let’s see if he does

RATBAG: Rhys Coffin

RATBAG: Rhys Coffin

Rip-off ratbag Rhys Coffin reacted quickly after our first post about him appeared here on Monday.

Within hours he had emailed one former We Love Media Group staff member – owed $6k – to update him. Amazing as there had been no contact since mid-December.

At 12.01pm, the following was received:

“I have been trying to get hold of people in my network over the christmas break who can help me to get cashflow in so this can be resolved and I’m at work today to continue with this. I will have a concrete outcome this week. 

“Will keep you updated.”

Fifteen minutes later, another email followed:

“UPDATE

“I’ve got hold of 2 debtors just now and have set up meetings to collect funds for we and thurs. Will update as I know.

“There is $10k outstanding FYI”  

Read more »

Serepisos arrested at airport

Ratbag Terry Serepisos, living life on the large has had the fun times curtailed somewhat after being arrested at Wellington airport last night

Reality TV star and bankrupt property developer Terry Serepisos will appear in court after reportedly being arrested at Wellington airport last night.

Inspector John Spence told the Dominion Post Serepisos was taken to Wellington Central police station, and was then released on bail to appear in court this morning.

Inland Revenue reportedly asked police to meet Serepisos after he landed in Wellington on an inbound international flight.

Serepisos could not be reached for comment this morning.

Serepisos, the former host of the Zealand TV series of The Apprentice, has been before the courts over his debts and also lost control of Wellington’s Phoenix Football Club as he fought to stave off bankruptcy.

He was declared bankrupt in 2011.

Nine of Serepisos’ companies are currently in liquidation, according to the Companies Office.

Read more »

Face of the day

Sally Ridge

Sally Ridge

Just pay him already Sally and move on. The only ones winning in this dispute are the lawyers.

Read more »

An insiders view of bankruptcy and insolvency in NZ

A reader emails:

Hi Cam

I read your blog from time to time and also tend to pick up pieces you run on insolvency type issues such as the one you ran recently titled “Bankruptcy is a Joke.”

I am in my 50s and have pretty well been part of the insolvency industry in NZ since the day I walked out of Uni all those years ago. I thought I would post a few pieces to you on insolvency to explain how it works and why we have so many issues in this area. I will also proffer some solutions, one of which would save the government money, direct public insolvency resources to better use and tidy the industry up a little

In the big picture insolvency procedures are critical to a capitalist economy. The business and consumer cycle in its simplest form has birth (of a business or a consumer) their life and their death (for the consumer not their literal death but their financial death). Insolvency is the ailment that leads to death. Insolvency procedures are in place to clean up the bodies and bury them. If you don’t clean up the bodies you end up with a stinking mess. At its heart it is the realisation of the assets that are left and a sharing of the proceeds of those assets amongst the creditors pro rata.

In this piece I will discuss liquidations. I will follow up later on bankruptcy and the use of trusts. There are 3 common ways a company can be placed into liquidation. By a shareholder resolution, by its board if the constitution allows (rare) and by an application to court usually by a creditor. With shareholder and board appointments the appointers choose the liquidator and if they consent before hand they are appointed. With a court application the petitioning creditor can seek consent from a liquidator to take the appointment. If no liquidator consents to the appointment then by default it goes to the Official Assignee. The Official Assignee also appoints themselves to liquidations of companies controlled by bankrupt shareholders.

As a general rule you can have confidence in private liquidators appointed by the court. Why? These liquidators have gone in at the request of a petitioning creditor and sometimes have an indemnity for fees. They are hardly going to bite the hand that feeds them. They are also less likely to favour the shareholders or directors over the creditors. At worst they might be professionally out of their depth and miss asset realisation opportunities. In some cases despite court appointment they just don’t do their job properly. But as I say this is rare in court appointments. If you scan public notices or the Gazette the bulk of court applications and appointments are on the petition of IRD. IRD has its owns liquidators in high profile firms and some others around the more provincial areas. These liquidators are as a general rule highly experienced and do a good job.

There has been a trend over the last few years for IRD appointments to go to the Official Assignee. This can only happen if IRD’s preferred liquidators do not consent to take the liquidations or IRD does not bother to ask them for a consent to be liquidator. I suspect the preferred liquidators are picking and choosing leaving the rest to go to the Official Assignee.

By far the bulk of liquidations in NZ are voluntary appointments by shareholders. 75% of shareholders can vote to put a company into liquidation and appoint a named liquidator. If the liquidator consents to appointment then they are appointed.

Why do companies go into voluntary liquidation? Some do so because they no longer have a purpose to exist. The business has been sold or ceased, creditors have been paid (or funds are there to pay them). These are usually solvent liquidations and a tidy up. They also allow a distribution of capital back to shareholders tax free. Other reasons are that the shareholders just come to the realisation that the company is insolvent and needs to go. There is not always huge creditor pressure it is just the right thing to do. Then there are voluntary liquidations that occur because a creditor is heading towards liquidating the company. If you look at the stats in the Gazette IRD is the petitioning creditor in the bulk of liquidation applications. However, there are some other organisations that apply a zero tolerance policy to debt collection -” if you don’t pay we will liquidate you.” That sends a good clear message. Unfortunately for most day to day creditors the cost benefit of liquidating debtors does not stack up and so they leave it to others usually IRD.

A stat demand is in effect a test of insolvency. When a creditor issues a stat demand if you don’t meet the debt or dispute the debt the company is deemed to be insolvent. The next step is to apply to liquidate on the basis that the company cannot meet its debts as they fall due.

Many companies at this point go into voluntary liquidation. Why? There are a number of reasons. Dealing with a failing company is stressful. Just biting the bullet and going voluntary is a sensible option. Having a liquidator of your choice appointed at your cost can avoid the harder scrutiny of a court appointed liquidator. And, in some cases the the voluntary liquidation regime provides an avenue to spirit assets away or allow transactions that have occurred in the 2 years prior to liquidation to go unchallenged. It can also shield directors from banning orders and other remedies for creditors under the Companies Act and other legislation.    Read more »

No rest for the wicked

terry-serepisos

Bankruptcy was kind to Terry Serepisos.

Those stung by Terry Serepisos entering bankrupt will be delighted to learn that Whaleoil’s roving Hong Kong correspondent shared row 1 in Business Class with him flying on NZ118 Sydney to Auckland yesterday.  She takes an extremely dim view of people who do not pay their bills and was happy to pass on the information to the news desk.  It was lucky for Terry that he did not owe her money or any of her close friends else the three hour flight would have been a sledge hell.

Terry appears to be doing swimmingly.  Read more »

This would be a fascinating precedent

Imagine if you did something wrong and you were convicted for it.  You pay the fine, do the Community Service or jail time.  It’s all behind you now.

Should they be able to come after you to recover money for the rest of your life?

A convicted fraudster says she would suffer “extreme hardship” if she were required to pay back even a fraction of the $600,000 she stole from IHC.

But the High Court at Wellington was told yesterday that Lynn Fiebig, who is now out of jail and working as a car valet in Whanganui, has more than $11,000 in two bank accounts.

Fiebig, 60, was sentenced to three years’ jail in 2010 for defrauding IHC of $590,029.80 while working as its fundraising manager between November 2006 and May 2009. Most of that money funded her luxury lodge project, Ahuru Lodge, in Ohakune, previously owned with her partner.

Associate High Court Judge Warwick Smith yesterday ordered her to pay $25 a week to IHC for the next two years. The reparations, totalling $2600, would amount to just a fraction of the debt she owed, which now stands at more than $750,000.

I think this has huge repercussions.  It could be possible to go after defaulters of loans, even after bankruptcy by civil means.  It could be possible to take the driver of a car that killed your child to court and insist on perpetual payments for emotional harm and loss of quality of life.   Read more »

Bankruptcy is just a joke, really

gold-bullion

Bankruptcy is like a toothless tiger that benefits the bankrupt more than the victims

A former rich-lister recently discharged from bankruptcy is heading back to court, facing charges including misleading authorities and concealing property.

Jamie Peters, who made the National Business Review Rich List in 2006 with an estimated fortune of $40 million, was declared bankruptin 2009 owing more than $100 million. Read more »