Rich-lister fights million-dollar yacht deal
A Rich Lister is fighting to claw back more than $1 million from a boat-building group that collapsed just after he commissioned a 70-foot luxury yacht.
Wine mogul Jim Delegat, worth an estimated $150 million, is awaiting a High Court judgment that will determine whether his funds can be salvaged from the wreck of failed Auckland boatbuilders Salthouse Marine Limited (SML).
Delegat flew to Perth in late 2009, where Australian multi-millionaire and former SML director Chris Norman persuaded him to order a Salthouse 68 motor yacht.
Previous bespoke models have been laden with luxury leather furnishings, flatscreen TVs and air-con cabins, with the ability to sleep eight people and reach speeds of 30 knots.
But just three months later, Norman had pulled the plug on the 27-year-old SML group, putting 51 workers out of a job and leaving debts of $2.5 million.
Now he is being sued by Delegat's business trust and an SML subsidiary, which allege that he breached his director's duties to creditors.
SML's operating style was to create single-purpose subsidiary companies for the construction of each vessel. The company building the Delegat trust's yacht was named Boat 93.
Delegat's lawyers claim that his money was then diverted to prop up three related holding companies - Boat 89, 90 and 92.
Liquidators reports found one of the subsidiaries had borrowed Delegat's money to help build a $3.5m luxury boat for Norman's company, Yachts West and that more cash was loaned to complete another yacht, named Summersalt, for a previous customer.
One report said Delegat was ''totally unaware'' of what was going on.
Lawyer Chris Patterson, representing the Boat 93 liquidator and the Delegat trust, told the court the transfer of funds resembled a Ponzi scheme.
"It was always going to come to an end once Mr Norman put his boats in the water," he said to BusinessDay.
"Whoever was the last customer - unfortunately, Mr Delegat - was always going to suffer the greatest loss."
After the two boats were built Norman appointed a receiver to SML, with a host of subsidiaries toppling in its wake.
But Norman's lawyers said he ''agonised over the decision and felt physically ill'', having previously believed the company could return to profitability.
Delegat was left with a half-finished hull worth roughly $150,000, and standing in a long line of other unsecured creditors.
"The upshot is, Norman told [Delegat] to come and collect his hull and go away," Patterson said.
It is claimed that Delegat has since poured an additional $4.7 million into finishing the yacht himself.
Forensic Accounting's David Pettersen, who is liquidator for Boat 90 and 92, said in a report that the shuffling between subsidiaries was "borrow[ing] from Peter to pay Paul".
He said the actions were "nothing short of reckless", concluding they were instrumental in the losses to creditors and the group's collapse.
Norman was not named as a director of any of the boat subsidiary companies, and has asserted that he had no role in their affairs.
Although Norman declined to comment, in the closing summary from the court action his lawyers said it was SML general manager Julie Salthouse who had the real power in the relationship.
They have named Salthouse as a third party to the claim, applying to the court to try and have her share any potential liability.
But the plaintiffs argued that Norman's extensive involvement as a former SML chairman, shareholder and financier made him a ''shadow director'' and claimed he, in fact, had absolute power.
They are seeking to make Norman put enough money back into all the failed companies to repay creditors and liquidators, including Delegat's claim for $1,080,000.
Norman's background is in naval architecture, and his remaining stake in a Perth-based shipping company he co-founded, Austal, is understood to be worth $54m.
She pleaded in her statement of defence to the court that Norman had the "overall financial control responsibility", but also gave evidence that he was uninvolved in the subsidiaries.
She's refused further comment while the issue is before the court.
Justice Woolford has reserved his judgment, which is not expected to be released for at least a month.
- © Fairfax NZ News