Receivers of Capital + Merchant are suing Insolvency Service alleging it stuffed up the GST calculation on an $18.5 million out of court settlement with auditors BDO Spicers.
Capital + Merchant Finance Ltd went bust in 2007, owing some 7500 retail investors $167 million. Insolvency specialists KordaMentha are realising company assets. Its latest report discloses payouts to retail investors to date total twelve million dollars; less than ten cents in the dollar. Currently in the mix is an unresolved GST assessment of $1.75 million. Inland Revenue claims GST is payable on part of the $18.5 million BDO settlement. Details have not been made public, but the settlement was part-funded by BDO’s insurers. Insolvency Service, as liquidators of Capital + Merchant negotiated the settlement. KordaMentha alleges Insolvency Service was negligent in not clarifying the GST position when agreeing to the settlement. Insolvency Service denies liability. Justice Muir indicated the issue is not likely to require a court decision until Inland Revenue and Insolvency Service resolve their current tax dispute over whether Capital + Merchant is liable to pay the disputed $1.75 million. This dispute centres on the manner in which the $18.5 million payout was funded by insurance.
Gibson v. Official Assignee - High Court (16.05.18)
18.107