A
court-ordered freeze imposed on finance company NZF Money Ltd has been extended
to protect investors. But NZF Money is still
allowed to continue payments for legal expenses and ordinary business
expenses. The freeze was first imposed
in April 2012 when receivers indicated they are taking legal action following
allegations that company assets were sold at an undervalue, reducing assets
available for investors. This litigation
is still pending.
NZF Money went into
receivership in July 2011, after management announcements that company
liabilities exceeded assets by some four million dollars. At the date of receivership, NZF Money owed retail
investors about $16.4 million.
Provisional estimates indicate a return of between 25 cents and 42 cents
in the dollar.
The receivers allege
funds available to repay investors were dissipated when assets were shuffled
between companies in the group by the directors in October 2010. At issue are a bundle of mortgages
transferred from a NZF Money subsidiary to NZF Money’s holding company. The subsidiary was paid $1000 dollars for the
assets transferred. Eleven months later,
the holding company sold on these same assets for just over three million
dollars. The receivers argue this three
million dollars rightly belongs in the NZF Money subsidiary where it can be
used to repay investors. NZF Money
directors are arguing that the deal was a legitimate business transaction
designed to package up company assets for an onward sale which benefitted all
companies in the group, including NZF Money.
NZF
Money Ltd v. O’Connor – High Court (27.04.12)
(12.009)