Secured debenture holders in defunct property financier St Laurence will receive their first repayment, 9 cents in the dollar, in late January but won't be getting back any accrued interest.
In their second report receivers Barry Jordan and David Vance of Deloitte say the initial payment will follow them receiving the bulk of the NZ$18.8 million later this month from selling St Laurence's 30 million units in the National Property Trust and the internalising of its management contract which St Laurence owned.
An insolvent St Laurence was tipped into receivership by trustee Perpetual Trust in April owing about NZ$245 million to more than 9,000 investors. It owed 9,431 secured debenture holders NZ$212 million in principal and NZ$27.1 million in interest.
In their first report Jordan and Vance predicted secured debenture holders would get back between 15 cents and 22 cents in the dollar on top of the 10c they got under St Laurence's failed moratorium.
"The first distribution of approximately 9 cents in the dollar is scheduled to occur in late January 2011," the second receiver's report now says.
"Given that there is unlikely to be a full payment of secured principal, no distribution of accrued interest is expected. Similarly, we do not consider there will be any amounts available for unsecured creditors including the Capital Note holders (owed NZ$12.3 million including interest)."
Aside from the National Property Trust interests, St Laurence's other assets consist of a 34% stake in Irongate Property and Irongate's management contract, and a loan book with a face value of NZ$74.7 million before provisions comprising 14 loans, which all bar one were in default at the date of the receiver's appointment.
Jordan recently told interest.co.nz that St Laurence debenture holders' prospects of getting back returns at the higher end of the receiver's estimate depends on how events unfold at the beleaguered Irongate.He said some "good outcomes" had been achieved with the loan book. The second receiver's report notes a "mixture of success" realising the loans with some achieving better results than anticipated and others encountering "further" problems.
"The largest loan in the portfolio involves a glass/metal recycling operation in New South Wales," the report says.
"We have had to work closely with the borrower, potential purchasers and local environmental agencies to ensure any environmental issues are resolved before sales are finalised."
St Laurence also has a NZ$20 million guarantee from its managing director Kevin Podmore and associated companies Auguste, Neuhaus Stonefields and Auguste Albany provided as part of St Laurence’s moratorium plan in 2008. Under the guarantee they pledged to pay NZ$20 million if St Laurence was placed in receivership or liquidation 15 months after the date of the receiver or liquidator’s appointment and there was a shortfall in repaying debenture holders. However, the guarantee is likely to be worth substantially less than NZ$20 million if called in next year.
4 Comments
What procedures have been put into place to prevent Podmore simply putting his assets into trusts to avoid meeting any $20 million personal guarantee - if he can/could get away with this, what point is there for any personal guarantee,or do Courts have the legal right to nullify any such moves as illegal avoidance ?
Interested to know what the situation here is because it's an issue now with a numerous people like Hotchin, Podmore etc
If you sell your assets into trusts at fair market value,the trusts will owe you that market value on paper.At present a person can gift $27,000 per year without paying gift duty,thus your assets cannot be spirited away overnight.Of course you can try to delay the clawback by using something like a Hawkins rather than a Marshall clause,as Auckland professionals were promoting during the property investment seminars..
The laws in this country are very weak in terms of clawing back settlements into trusts,and in attacking preferential payments to creditors in an insolvency scenario.Essentially there is a two year window.
It is good to see Inland Revenue attacking company directors and trustees for unpaid revenue.There are too many people hiding behind a corporate veil.
Another comment I would make is that there has been alot of insolvency work in ordinary NZ carried out by friendly practitioners,who for instance are reluctant to attack directors under the companies act.Thankfully there seem to be an increasing amount of forensic practitioners around.
Someone in business should logically commemce asset protection moves early in the piece,so that any capital growth takes place in trust rather than in their own names.That may mean that in personal terms,if insolvency strikes,they have little of value which can be attacked.For instance,the developer Mr K,although bankrupt,no doubt has extremely wealthy trusts which remain sheltered.
Because you have a free market government in power that want to make is easy for crooks to rip off the public and hide all their assets.
And guess what....next year I am going to put all my assets into trust.
Then I can be as reckless as I like and no-one can touch me.
And with no estate duty,inheritance tax,stamp duty,capital gains tax,land tax or gift duty.....what a tax haven for the crooks of the world.....and a country where white collar crime does pay....
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