Blue
Chip promoter Mark Bryers has been discharged from bankruptcy but is prohibited
from running any business in New Zealand until 2022 after opposition to his
discharge by the Official Assignee. The
Insolvency Service had wanted a lifetime ban.
Mr Bryers created the Blue Chip investment
scheme inviting retail investors to finance apartment developments. The Blue Chip empire of seventy one companies
went into liquidation in 2011 with losses of some $310 million. Mr Bryers personally owed $150 million. He was bankrupted in October 2009. Insolvency Service inquiries found that
personal assets previously owned by Mr Bryers were tied up in a trust. The only asset available was a tax refund of
$113,166.
In the normal course of events, restrictions on
bankruptcy end after three years. In the
interim Mr Bryers was convicted of offences under the Financial Reporting Act
and the Companies Act which saw him prohibited from managing any company for
five years. He served a sentence of 75
hours community work and paid a $37,490 fine.
The High Court was told Mr Bryers spent much of
the last five years living in Australia.
A bankrupt cannot leave New Zealand without the Official Assignee’s
consent. Mr Bryers was given
consent. But the Insolvency Service was critical
that Mr Bryers appeared to be managing a business in Australia while bankrupt. There was evidence of unsuccessful attempts
to replicate a Blue Chip-style business across the Tasman. It was alleged Mr Bryers has an ongoing
management role within an Australian company: Talos. In New Zealand, the Insolvency Act forbids any
undischarged bankrupt from carrying on a business without the consent of the
Official Assignee. Judge Doogue ruled
that New Zealand insolvency legislation does not have extra-territorial effect:
it only applies to activities carried on in New Zealand. Mr Bryers was not in breach of New Zealand law
by managing a business in Australia, but His Honour said Mr Bryer’s activities
in Australia were relevant in deciding whether he should be discharged from
bankruptcy in New Zealand.
The court was told Mr Bryers is working under
the name of Mark Ryan while holding a senior management role within Talos. Mr Bryers claimed he was simply a consultant
to the company. Judge Doogue said he was
plainly not a consultant, but was discharging management functions within
Talos. It was not of trivial importance,
His Honour said, that Mr Bryers worked under an assumed name in Australia. Neither Talos nor Mr Bryers wanted it to get
out that he was a person with an undesireable business history in New Zealand.
Judge Doogue ruled that Mr Bryers does
represent a continuing commercial risk to New Zealand investors. He discharged Mr Bryers from bankruptcy but
prohibited him from running any business in New Zealand for a further period of
seven years.
Bryers
v. Official Assignee – High Court (6.03.15)
15.018