Bankrupted in 2016, Shane McKillen engineered appointment of a close business associate as liquidator of his company then known as Waipak Ltd in an apparent attempt to maximise benefits that might flow to shareholding family trusts. The High Court ordered Insolvency Service replace Chris Horton as liquidator saying Mr Horton lacked independence.
A business relationship between the two stretched back many years; Mr Horton acted as provisional trustee of a part-payment scheme put to creditors by Mr McKillen to stave off bankruptcy. This proposal was shot down in the High Court. Related party debts of $23 million voted in favour of the scheme were disqualified from the count.
His company, then known as Waipak Ltd, went into liquidation in August 2017 voluntarily on shareholder vote. Based in the Hawkes Bay, Waipak manufactured rigid plastic bottles and closures. Prior to liquidation, Mr McKillen teed up Mr Horton to act as liquidator. The High Court was told of ongoing antagonism between Mr McKillen and Bruce Keatley, former marketing director and shareholder of Waipak. Before liquidation, the company name was changed to FUB Ltd. The name change was a snub to Mr Keatley, with FU Bruce signalling Mr McKillen’s views. As liquidator, Mr Horton initially rejected liquidation claims by Mr Keatley for unpaid holiday pay and has maintained his rejection of Mr Keatley’s claim for repayment of loans to the company.
Expecting a challenge from creditors, Mr Horton went to court asking for confirmation of his appointment. Associate judge Sargisson removed him from the job. Under the Companies Act, any person having a continuing business relationship with a company in two years prior to liquidation can be removed as liquidator. Judge Sargisson said Mr Horton’s allowance of related party votes in Mr McKillen’s failed part-payment scheme and his apparent partiality in dealing with claims in FUB’s liquidation raise concerns about Mr McKillen exerting influence over conduct of the liquidation.
Just Beverages Ltd v. Horton – High Court (29.08.18)
18.174