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

 

ETS Review: Modelling Documents Released

Three technical documents are being released to help New Zealanders engage with the Emissions Trading Scheme (ETS) review, Climate Change Minister Paula Bennett says. More>>

ALSO:

Northland: Govt Plan Targets Transport, Web, Maori Assets

The government has released a 10-year plan to attract investors and lift economic growth in Northland, a region that perennially underperforms the rest of the country even while being endowed with natural beauty, productive land, minerals, a potential workforce, scope for manufacturing, forestry and aquaculture, and proximity to Auckland. More>>

ALSO:

Statistics: Unemployment Rate Falls To 5.3 Percent

The unemployment rate fell to 5.3 percent in the December 2015 quarter (from 6.0 percent), Statistics New Zealand said today. This is the lowest unemployment rate since March 2009. There were 16,000 fewer people unemployed than in the September ... More>>

ALSO:

Employment: Labour Urges Talley’s To End AFFCO Lockout

Labour has urged Talley’s to resolve the ongoing industrial dispute with AFFCO workers which is having a severe effect on the employees, their families and their communities, Labour’s Workplace Relations spokesperson Iain Lees-Galloway says. More>>

ALSO:

Three Kings: Govt To Oppose Appeal Blocking $1.2B Auckland Housing Plan

Environment Minister Nick Smith and Housing New Zealand have joined legal proceedings in support of Auckland Council and Fletcher Building opposing a bid by community groups to only allow low-rise housing in a $1.2 billion housing redevelopment on the disused site of the Three Kings quarry. More>>

ALSO:

Transport: Jetstar Expands Regional Network With Three New Routes

More New Zealanders than ever before will have access to Jetstar’s affordable flights when new services take off today from Auckland to New Plymouth and Palmerston North, and Nelson to Wellington. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news