What was a backdoor attempt to protect a profit share agreement benefitting bankrupt property developer Mark Ensom to the tune of four million dollars was dismissed by the High Court.
Mr Ensom was bankrupted in February 2020. Insolvency Service expects unsecured claims to total some $2.2 million. The High Court was told Mr Ensom is entitled to fifty per cent of a profit share agreement with Christchurch-based financier Alliance Diversified Holdings. They share net profits from both rents and the ultimate sale of nominated properties. The current value of this profit agreement is disputed; Insolvency Service calculates Mr Ensom is entitled to $178,000 as his share of rents and potentially as much as four million dollars on sale. It is looking to cash up, for the benefit of Mr Ensom’s unsecured creditors. Cashing-up requires a tripartite agreement between Insolvency Service (exercising Mr Ensom’s rights), Alliance and Bridgewest Finance – another financier, associated with Alliance.
In the background, Bridgewest is forcing a mortgagee sale of property in Rawene Avenue Westmere Auckland. The High Court was told $2.6 million was owed as at March 2020. Default notices were issued six months previously. This property is owned by Stark Trustee Ltd. Sole director is Mr Ensom’s partner, Stephanie Winitana.
Bridgewest’s interest in the Ensom profit share agreement is tied to its Rawene mortgage; profit share payments received by Mr Ensom go first in reduction of the Bridgewest loan. Through Stark Trustees, Ms Winitana is attempting to refinance the Bridgewater mortgage, placing in friendly hands both the debt and the contractual rights over Mr Ensom’s profit share agreement. Stark Trustees asked the High Court to block further sale progress by Bridgewest. Stark said it has funds in hand to refinance the Bridgewest loan. It disputes how much Bridgewest claims is owed.
Justice Fitzgerald refused to block Bridgewest’s mortgagee sale. If Stark does have the money, buy out Bridgewest’s interest, she said. Evidence was given that previous promises to repay the Bridgewest loan had come to nothing.
Stark Trustees Ltd v. Alliance Diversified Holdings NZ Limited Partnership & Bridgewest Finance (New Zealand) – High Court (20.11.20) & (22.07.20)
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