Creditors of former high-flying property developer David Blackmore are being offered a fraction of a cent for every dollar they are owed if he avoids bankruptcy.
Under a proposal outlined in the High Court yesterday, Mr Blackmore is offering $100,000 to settle debts of $26 million, most of which is owed to banks and finance companies.
The offer of payment is underwritten by prominent Wellington developer Mark Dunajtschik, who now employs Mr Blackmore to manage the continued redevelopment of the old James Smith building in Cuba St.
Associate Judge David Gendall expressed his concern that a settlement by which Mr Blackmore paid less than half a cent in the dollar might set a precedent and "open the floodgates" for others to run up huge debts and then offer their creditors a trifling amount.
Mr Blackmore's lawyer, Paul Chisnall, said the debts had blown out dramatically because of high penalty interest rates.
The $100,000 offer was not insignificant, Mr Chisnall added.
Mr Blackmore had been totally candid with creditors, there was no indication that property had been transferred to avoid creditors, he was not living extravagantly, and he had made every endeavour to meet his liabilities.
He was not trading on his own behalf, and creditors would be worse off if he was declared bankrupt. The court could be confident there was no need for the Official Assignee to look at his past activities.
It was a genuine and reasonable proposal to address his insolvency and its acceptance by the court would benefit creditors, Mr Chisnall said.
Judge Gendall reserved his decision on whether to declare Mr Blackmore bankrupt, saying he needed to weigh up the public interest in this matter.
Speaking outside court, Mr Blackmore said Mr Dunajtschik had underwritten the payment offer in exchange for his commitment to make the James Smith property work for him.
- © Fairfax NZ News
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