Blue Chip liquidators abandon director legal action
The liquidators of failed property investment scheme Blue Chip have finally thrown in the towel, saying they have not been able to get funding to sue Blue Chip's directors.
Former Cabinet ministers Wyatt Creech and John Luxton and scheme founder Mark Bryers were among the directors targeted in legal action alleging reckless trading during their time at the helm.
Meltzer Mason Heath, liquidators of 50 Blue Chip companies for the past five years, said it had proved impossible to secure the necessary funding to prosecute a large and complex claim.
Blue Chip collapsed in February 2008. About 1200 mostly older investors are still owed up to $120 million, the liquidators say.
Suing the directors was the out-of-pocket investors' last hope of getting any compensation for their losses.
"The proceedings issued by the liquidators against former directors and auditors of the Blue Chip Group have ended by consent of all parties involved," Meltzer Mason Heath announced today.
The liquidators' action was running in parallel with a similar case being brought by Auckland barristers Paul Dale and Daniel Grove.
Dale and Grove successfully took a case to the Supreme Court on behalf of 235 Blue Chip victims which resulted in settlements with the developers of apartment buildings they had invested in.
However, the barristers were also unable to raise funding for the directors action.
Meltzer Mason Heath had planned to seek between $15m and $40m in reparation.
Investors were not asked to contribute to the funding because even if the action were successful there may have been little left in the pot once liquidation costs and secured and preferential creditors - including the Inland Revenue Department - were paid.
There had been an application for the appointment of other liquidators, but this did not proceed, Meltzer Mason Heath said.
It will now complete the liquidations, it said.