Five Star Consumer Finance directors banned for 5 years

The directors of failed finance company Five Star Consumer Finance have been banned from directing or managing companies in New Zealand for five years by the Companies Registrar (Ministry of Economic Development (MED)). Marcus Arthur MacDonald, Nicholas George Kirk and Anthony Walpole Bowden were the directors of Five Star when it failed and was put into receivership in August 2007, owing NZ$51 million to investors in over 2,000 deposits. It was estimated that secured debenture investors would receive 22.5 to 25 cents back for every dollar they invested. Deputy Registrar of Companies Peter Barker said he found the directors' failings to be "serious and fundamental" when he considered whether "the directors fully understand their duties and responsibilities". "Under section 385 of the Companies Act, where a person has been a director of more than one failed company within 5 years, that person must satisfy the Registrar that their management of the companies' affairs that was not, at least partly, responsible for the companies' demise," MED said. "Mr MacDonald, Mr Kirk and Mr Bowden were unable to satisfy Mr Barker that the way in which they managed the affairs of the Five Star group of companies did not lead to the failure of those companies," the Ministry said. "The report to the Registrar of Companies by the Ministry of Economic Development's National Enforcement Unit alleged mismanagement including: reckless trading; breaches of each of the director's duties under the Companies Act 1993; and the failure to maintain adequate books and records." "The directors requested that the decision on this matter should be delayed until they had faced additional pending charges. They believed the result of this decision could prejudice the following criminal proceedings. However, Mr Barker advised "there is no reason to delay this decision" as any other legal proceedings are "separate and distinct from these matters"." In the receivers reports for Five Star, receivers PricewaterhouseCoopers noted that of the NZ$41 million lent in commercial loans by the company, "the majority of the commercial loans were outside commercial lending practices and made without either any security or satisfactory security". See our Deep Freeze List of failed finance companies in New Zealand.