Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


Appeal Court upholds nixing of Krukziener-Hanover deal

Krukziener’s $250k payment in Hanover settlement insolvent transaction, Appeal Court rules

By Paul McBeth

Feb. 5 (BusinessDesk) - The Court of Appeal has ruled a $250,000 payment made by Andrew Krukziener as part of a 2009 deal with Hanover Finance was an insolvent transaction designed to sidestep the implications if the former property developer was bankrupted, the Court of Appeal has found.

Justices Lyn Stevens, Forrest Miller and Robert Dobson dismissed an appeal by HF Residual Obligations, formerly Hanover Finance, seeking to overturn a High Court decision deeming the payment to be an insolvent transaction, meaning it could be cancelled by the Official Assignee in charge of the bankruptcy of Krukziener’s property. The Dec. 17 judgment was published on the Justice Ministry’s website this week.

“We are satisfied that the deed, rather than documenting a genuine commercial transaction, was a device entered into by Hanover in an attempt to circumvent the limitation on one creditor obtaining preference over others in the bankruptcy of Mr Krukziener,” the judgment, given by Justice Stevens, said.

The payment was the first instalment of a settlement Krukziener reached with Hanover in a bid to stave off bankruptcy after the finance company had been granted a summary judgment against the property developer over loans totalling some $4.2 million.

The deal would have seen companies associated with Krukziener pay $700,000 to purchase the debts from Hanover, paying $250,000 up front, a further 25 monthly instalments of $10,000 and a final payment of $200,000.

“The relevance of the substance of the transaction invites consideration of the commercial reality confronting Hanover and the Krukziener entities at the time the deed was drafted,” the judgment said. “His solvency was questionable, so that any amount he was prepared to pay to forestall bankruptcy would only have value to Hanover if it could be structured in a way that protected Hanover from a claim for repayment in the event that Mr Krukziener was subsequently declared bankrupt.”

Hanover submitted Krukziener didn’t make the payment, rather it was made on behalf of the companies owing the debt, and that it wasn’t to satisfy a debt owed by the property developer, and couldn’t fall within the definition of an insolvent transaction.

The Official Assignee emphasised “the need to focus on the true nature of the transaction, namely, that Mr Krukziener had negotiated the settlement of the judgment debt owed by him to Hanover in order to avoid bankruptcy,” the judgment said.

Hanover didn’t want the initial payment to be challenged as an insolvent transaction if Krukziener didn’t manage to stay afloat, but the judges deemed the provisions didn’t achieve that purpose, the judgment said.

“That heavily discounted amount was payable pursuant to a deed that was designed to minimise the risk of the payment being characterised as a preference should Mr Krukziener pass into bankruptcy,” it said.

“It had been designed about as well as clever drafting could achieve and, had the Official Assignee been bound to respect the form of the transaction, it was a structure that would have worked. However, it cannot withstand an analysis of the substance of the transaction.”

Krukziener was bankrupted on a separate application by the tax department in December 2010, and has since been discharged last December.

(BusinessDesk)


© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Scoop Business: Alex Swney Pleads Guilty To $2.5M Fraud Charge

Alex Swney, former chief executive of the Auckland city centre business association Heart of the City, has pleaded guilty to dishonestly using documents to obtain $2.5 million. More>>

ALSO:

Petrol Burns Prices: Second Consecutive Quarterly Fall For CPI

The consumers price index (CPI) fell 0.3 percent in the March 2015 quarter, following a 0.2 percent fall in the December 2014 quarter, Statistics New Zealand said today. The last time the CPI showed two consecutive quarterly falls was in the December 1998 and March 1999 quarters. More>>

ALSO:

Scoop Business: NZ Broadcasters Launch Battle Against Global Mode ISPs

New Zealand broadcasters have confirmed they’ve launched legal proceedings against internet service providers who give customers’ access to “global mode”, which allows customers access to offshore online content, claiming it breaches the local content providers’ copyright. More>>

ALSO:

Sanford: Closure Of Christchurch Mussel Processing Plant Confirmed

The decision comes after a period of consultation with the 232 staff employed at the Riccarton site, who were told on 9 April that Sanford was considering the future of mussel processing in Christchurch. Recent weather patterns had impacted on natural spat (offspring) supply... More>>

ALSO:

Price Of Cheese: Dairy Product Prices Fall To The Lowest This Year

Dairy product prices fell in the latest GlobalDairyTrade auction, hitting the lowest level in the 2015 auctions so far, as prices for milk powder and butter slid amid concern about the outlook for commodities. More>>

ALSO:

Houston, We Have An Air Route: Air New Zealand To Fly Direct To The Heart Of Texas

Air New Zealand will fly its completely refitted Boeing 777-200 aircraft between Auckland and Houston up to five times a week opening up the state of Texas as well as popular nearby tourist states such as Louisiana and Florida. More>>

ALSO:

Scoop Business: Reserve Bank’s Spencer Calls On Govt To Rethink Housing Tax

The Reserve Bank has urged the government to take another look at a capital gains tax on investment in housing, allow increased high-density development and cut red tape for planning consents to address an over-heated Auckland property market. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news