Thea Muldoon caught out as Chancery bombs

Last updated 15:25 22/01/2009

Relevant offers

More than 1300 investors, including Dame Thea Muldoon, owed $17.4 million by failed VTL Group subsidiary Chancery Finance are unlikely to receive a cent back from the company.

``It's up in smoke,'' says liquidator Bernard Montgomery this week, confirming investors would receive no money back from the company.

``Everybody will be disappointed,'' said Gavin Muldoon on behalf of his mother, Dame Thea (the wife of former prime minister the late Sir Robert Muldoon). But, he added, the losses his mother incurred from Chancery would not adversely affect her personal finances.

``She has a wide variety of investments,'' Muldoon said. ``My mother tends to make conservative investments and she missed out on this occasion.''

More than 40 finance companies owing more than $6 billion have gone to the wall since the credit crunch hit. Recovery rates range from zero for Chancery to an estimated 90% of the $296m owed by Provincial Finance on 14,000 deposits, according to finance company analyst interest.co.nz.

Chancery's sole remaining director Gary Stevens (fellow directors Mervyn Doolan and John Hotchin resigned, respectively, in January 2008 and October the previous year) placed blame for the liquidation at the feet of failed Nathan's Finance, also a VTL subsidiary.

When Nathans was placed in receivership, Stevens said in a statement to the liquidator, it left VTL with negative equity.

``VTL Group is now in receivership and, as a result, its wholly owned subsidiary Chancery Finance is in liquidation,'' he said.

Nathan's directors, Hotchin, Donald Young and Kenneth Moses, are due to appear in the Auckland District Court today to answer criminal charges laid by the Securities Commission. Stevens, Young and Moses are also directors of VTL.

The commission alleges the trio issued documents that misled investors as to the risk, particularly from extensive related party lending.

VTL owed Nathans about $112m at the time of its receivership

``As liquidator,'' Montgomery said in his first report, ``it is clear to me that the single greatest matter affecting Chancery's solvency is the intercompany advance made to VTL.

``The [$18.7m] loan was doubtful value, as evidenced by a doubtful debt provision for the entire amount as shown in the company's latest audited financial statements,'' he said.

It also lent to other VTL subsidiaries, including Nathans.

``Effectively, the only remaining asset is a $50,000 Trust Deed Bond,'' Montgomery said. ``The costs involved in meeting the liquidator's statutory duties will be funded, at least in part, from this asset.''

Ad Feedback

Further, the $17.4m in bonds issued by Chancery were subordinated and ``the trustees had no power to enforce payment of the bonds, even when Chancery and/or VTL Group was in breach of a provision of the trust deed'', he said.

Montgomery is investigating whether the directors have broken the law or if voidable transactions have occurred. He will consider making claims against the directors and ``where sufficient evidence exist, any breaches of legislation will be reported to the relevant authorities''.

 

- The Independent

Special offers
Opinion poll

Does New Zealand have too many meatworks?

Yes

No

Vote Result

Related story: Some meatworks 'need to close'

Featured Promotions

Sponsored Content