Formerly a director of both Tourism Holdings and Harmoney, Christina Domecq has been held liable on debts exceeding $13.2 million with interest running at up to sixty per cent per annum on one loan.
Ms Domecq personally guaranteed bridging finance as part of Fulcrum Group’s proposed float on ASX. The float never eventuated; start-up costs crippled what was touted as the next big thing in data analytics. The High Court was told of Fulcrum’s increasing indebtedness resulting in ploys to keep loans ‘off the books’, designed to present a more attractive picture to prospective investors. Instead of Fulcrum borrowing in its own name, Ms Domecq had Fulcrum funding pass through a company she controlled: Foundry Innovations Ltd. Ms Domecq guaranteed Foundry’s borrowing. The funds were passed on to Fulcrum. Foundry, as Fulcrum’s majority shareholder, expected to recover this money handsomely following Fulcrum’s public offering. When listing plans fell over, both Foundry and Ms Domecq were left exposed. In addition, Ms Domecq guaranteed working capital provided by Heartland Bank to companies she controlled.
Three financiers successfully sued Ms Domecq on her guarantees: Heartland Bank owed $12.8 million; JCCL Global Pty Ltd owed $A250,000 plus interest running at forty per cent; Spofforth Pty Ltd $A130,000 plus interest running at sixty per cent. Associate judge Bell ruled these high interest rates were not ‘unfair’ as defined by Australian credit legislation. The loans were short-term and unsecured. Rates charged reflected the commercial risk taken.
The court was told her debt to Heartland Bank was reduced in part following the $404,100 sale of a property at Makora Avenue, Waiheke.
JCCL Global Pty Ltd v. Foundry Innovations Ltd; Spofforth Pty Ltd v. Foundry Innovations Ltd – High Court (4.06.19); Heartland Bank Ltd v. Domecq – High Court (7.06.19).
19.108
Post judgment note: Ms Domecq filed for bankruptcy on 10 June 2019.