Blue Chip debt put at $59m

About 2000 Blue Chip investors are $58.7 million out of pocket through the collapse of 19 companies linked with the property investment franchise.

The first reports to investors and creditors from liquidators Meltzer Mason Heath, being sent out this weekend, make grim reading for investors.

The liquidators draw no conclusions yet about how much money may or may not be recovered.

Two creditors' meetings will be held for the various companies in Auckland on March 26.

The liquidators are investigating various issues concerning the running of the companies - including whether or not any directors or former directors breached any duty to the companies under the Companies Act 1993.

They also point to "a lack of sound management disciplines by senior management" of one of the companies.

The Serious Fraud Office is already investigating Blue Chip while, separately, the Commerce Commission is investigating whether or not it breached the Fair Trading Act.

Other investigations being conducted by the liquidators include:

Deposits received from investors where the cash was disbursed.

Study of cash flows before liquidation of some of the companies to ascertain cash received from rental income and how that cash was disbursed.

The circumstances regarding the creation of the "New Zealand private group" of companies - which includes those in liquidation - and the arrangements regarding the Blue Chip franchise contracted to that group.

Transactions with related parties.

Blue Chip was formerly part of Australian listed company Blue Chip Financial Solutions. However, in August last year the New Zealand branch was put in the hands of a franchise arrangement.

The master franchise holder, Diem, is still in operation, but its closely linked company Mide was also put into liquidation last week, owing $11.6 million.

- © Fairfax NZ News