It was not in the public interest to approve a part-payment scheme of arrangement keeping Auckland builder Ashok Maharaj from bankruptcy, the High Court ruled. His history of trading whilst insolvent and lack of substance to offers of paying creditors fifteen cents in the dollar in full settlement led to court refusal.
Mr Maharaj traded as a builder through his company Victory Builders and Developers Ltd. Victory is in liquidation, insolvent. To avoid personal bankruptcy, Mr Maharaj offered his personal creditors an Insolvency Act part payment deal. A binding deal requires approval of creditors by a majority in number representing three-quarters of debt by value, plus court approval. Associate judge Smith refused approval. With personal creditors claiming in excess of $515,000, promises to pay fifteen cents in the dollar over twelve months would require in excess of $75,000. Mr Maharaj claimed to have assets totalling only $450. He said payment would be funded by relatives plus income earned as a builder. There was no evidence of relatives’ willingness to contribute, Judge Smith said. Vague promises were not enough. There were also doubts over Mr Maharaj’s ability to earn sufficient income as a builder. The court was told Mr Maharaj was suspended in 2018 for six months by the Licensed Building Practitioners Board after complaints of negligent and incompetent work. His evidence before the Board was both evasive and inconsistent with documentation and other evidence before it, Judge Smith said.
It is not in the public interest to approve the part-payment scheme, Judge Smith ruled. Evidence indicated Mr Maharaj had been trading whilst insolvent for up to a decade. This arose from personal loans he took out at a default interest rate of 46 per cent and having never paid interest on the loans.
re Ashok Maharaj – High Court (12.02.19)
19.038