Australian investors needed High Court approval to support their claim to three million dollars used to prop up Blue Chip operations in Australia just before the company went into liquidation. New Zealand based liquidators had their doubts as to whether the money was ever available for use by the insolvent Australian Blue Chip company.
With Blue Chip operations in New Zealand going down the gurgler, promoter Mark Bryers set up shop in Australia with a company later named Northern Crest Investments. The company was listed on the Australian Stock Exchange (ASX) in 2006. The court was told some $A22 million was invested in the company by Manifest Capital Management Pty Ltd acting as a conduit for a number of investors.
In February 2008, Northern Crest was suspended from trading on the ASX. Attempts to rescue the company became problematic when Macquarie Bank withdrew previous offers of funding. With its large investment in Northern Crest, Manifest became deeply involved in refinancing negotiations. It agreed to provide $A3 million to help the company through its liquidity difficulties. Manifest described this advance as part of an underwriting agreement pending Northern Crest raising more equity capital, with the advance to be treated in the interim as a non-interest bearing loan.
In June 2011, Northern Crest was put into liquidation with New Zealand-based liquidators appointed: Messrs Lawrence and McCullagh.
Manifest’s claim in the liquidation for its purported $A3 million advance was rejected by the liquidators. They doubted whether there was a debt due because of concerns over the accuracy of Northern Crest’s financial records. Manifest was required to provide originals of any documents supporting their claim.
In the High Court, Justice Heath approved Manifest’s $3 million claim in the liquidation of Northern Crest. While the liquidators acted precipitately when initially rejecting the claim, he said, Manifest was criticised for not being more open with the liquidator about the circumstances of the debt.
The liquidators had been suspicious because documents supporting Manifest’s claim were miss-dated and the funds were paid not to Northern Crest but to a related company.
re Northern Crest Investments Ltd – High Court (20.12.11)
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