Assets in family trusts controlled by now-bankrupt businessman Paul Yarrow have been frozen by court order. Insolvency Service alleges assets are being hidden from creditors.
Paul Steven Yarrow was bankrupted in 2017 on a $14.8 million Westpac guarantee following the collapse of iconic Taranaki company, Yarrows. A decade earlier, his family trust purchased a property on Auckland’s Northcote Point for the then substantial price of $1.3 million. Mr Yarrow lives there.
The High Court was told of a series of transactions over a ten year period prior to his bankruptcy which saw movement of assets between successive family trusts, changes of trustees, forgiveness of debts owed to Mr Yarrow by various family trusts and favourable terms of an ‘on demand’ loan by Mr Yarrow to one family trust postponing until 2026 trust liability for repayment to Mr Yarrow.
All Mr Yarrow’s personal rights are now controlled by the Official Assignee, acting on behalf of creditors. Insolvency Service complains the extent of Mr Yarrow’s rights against his family trusts was not fully disclosed. It alleges earlier forgiveness of debts and changes to loan maturities were made at a time when Mr Yarrow was insolvent and were intended to defeat creditors, preventing Insolvency Service recovering from his family trusts. It alleges plans are afoot to sell Northcote Point and to hide the proceeds. Northcote Point was briefly listed for sale.
Justice Campbell imposed a freeze over family trust assets.
Official Assignee v. Yarrow – High Court (2.10.20)
20.160