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

 

Wine: 20% Of Marlborough Storage Tanks Damaged By Quake

An estimated 20 percent of wine storage tanks in the Marlborough region, the country’s largest wine producing area, have been damaged by the impact of the recent Kaikoura earthquake. More>>

ALSO:

ACC: Levy Recommendations For 2017 – 2019 Period

• For car owners, a 13% reduction in the average Motor Vehicle levy • For businesses, a 10% reduction in the average Work levy, and changes to workplace safety incentive products • For employees, due to an increase in claims volumes and costs, a 3% increase in the Earners’ levy. More>>

Women's Affairs: Government Accepts Recommendations On Pay Equity

The Government will update the Equal Pay Act and amend the Employment Relations Act to implement recommendations of the Joint Working Group on Pay Equity. More>>

ALSO:

Immigration: Increase In Seasonal Workers For RSE

The current cap will be increased by 1,000 from 9,500 to 10,500 RSE workers for the 2016-17 season. Mr Woodhouse says the horticulture and viticulture industry is New Zealand’s fourth largest export industry, producing almost $5 billion in exports. More>>

ALSO:

Hurunui: Crown Irrigation Invests Up To $3.4m In North Canterbury

Crown Irrigation Investments will invest up to $3.4m in the Hurunui Water Project, an irrigation scheme that will be capable of irrigating up to 21,000 hectares on the south side of the Hurunui River in North Canterbury. More>>

ALSO:

Not So Great:Butterfly Eradication Success

The invasive pest great white butterfly has been eradicated from New Zealand in a world-first achievement, Primary Industries Minister Nathan Guy and Conservation Minister Maggie Barry say. More>>

Gordon Campbell: On The Government’s Tax Cuts Fixation

Long before the earthquake hit, the dodginess of the government tax cuts programnme was evident in the language of its packaging. It is being touted as a “tax cuts and family care” package... More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news