Understating
debts by some eight million dollars meant the High Court refused a part-payment
insolvency proposal put forward by guarantors of the financially unsuccessful Raumati
Beach shopping village, near Wellington.
This despite unanimous approval from those creditors who voted and
favorable comments about the guarantors’ integrity.
Mr Keran Unka, who managed the failed project
is bankrupt. Members of his family, at
risk of bankruptcy because they guaranteed project borrowings, put a
part-payment proposal to creditors. His
wife and two sons offered to each pay $18,000 in 36 monthly instalments of
$500. If accepted by a majority of
creditors and approved by the court, a part-payment scheme under Part 5 of the
Insolvency Act wipes the balance due.
The High Court was told the guarantors were
jointly liable on debts totalling some $5.2 million. They have minimal personal assets. Creditors asked to vote on the part-payment
proposal were given less than a week to respond. All who responded voted in favour. A number expressed sympathy for the position family
members were left in. It later
transpired that not all creditors had been notified; further creditors owed
another eight million dollars had not been advised of the proposal.
Associate judge Smith refused approval. The huge understatement of liabilities and
the very short time frame given for only some creditors to consider the
proposal meant the court was unwilling to make an order binding on all
creditors. The guarantors may still put
a further more accurate Part 5 proposal before the court, he said.
re Unka
– High Court (20.05.15)
15.052