23 June 2017

Liquidation: Finnigan v. Ellis

Peri Finnigan and Boris van Delden from insolvency specialists McDonald Vague were told the net was cast too wide in their attempt to force lawyer Brian Ellis hand over personal tax returns and a statement of his financial affairs as part of their plans to sue directors of failed Wenztrou Co-operation Ltd.
In what is a first for New Zealand, Ms Finnigan and Mr van Delden are attempting to get access to directors’ personal financial affairs to see whether they are worth suing.  Australian courts have accommodated liquidators, in particular allowing them to see details of any professional indemnity insurance held by directors of insolvent companies.
As liquidators of Wenztrou, formerly known as Trojan Foods (NZ) Ltd, Ms Finnigan and Mr van Delden are looking to sue the company’s directors for some $775,000 alleging breach of their directors’ duties.  Liquidators have statutory powers under the Companies Act to examine on oath company directors about “the affairs of the company”.  Wenztrou’s liquidators want to see Mr Ellis’ personal tax returns for the period 2012 to 2016, copies of his personal bank statements, a list of all his assets and liabilities valued at more than $10,000 and the names of all trusts in which he has an interest as either trustee or beneficiary.
Associate judge Sargisson ruled the liquidators failed to justify why such wide-ranging demands were necessary.  She left open the question of whether liquidators should even be permitted to get access to directors’ personal financial details. 
Finnigan v. Ellis - High Court (23.06.17)

17.072