Using a series of ‘phoenix’ companies to cheat creditors of his Auckland business trading as Compass Roofing in what was labelled as deliberate, repeated and blatant dishonesty, Sam Oliver Spence was sentenced to three years nine months’ imprisonment.
With his various companies in liquidation, he sent abusive emails to liquidators trying to unravel his business affairs; when bankrupted, he refused to co-operate with Insolvency Service; and when on trial, he tried to manipulate the court’s sentencing process by forging character references and by falsely claiming to be Maori, seeking to have sentence reduced on cultural grounds.
Five years after Compass Roofing Ltd was set up in 2011, Spence’s business was in severe financial difficulty. Solvency was dependent entirely on Spence repaying some $154,600 he had drawn down from his company. Rather than repay his current account, Spence left Compass Roofing creditors stranded by transferring Company Roofing assets across to a new company he controlled called Compass Group Ltd. This was a ‘phoenix’ company, rising from the ashes of Compass Roofing and carrying on Compass Roofing’s former business. The Companies Act prohibits directors of a failed company from managing any company taking over its business assets.
When Compass Group itself got into financial difficulty, Spence repeated the process setting up a new phoenix company called Caspian Engineering Ltd and shifting Compass Group assets across to Caspian. This time, it was Compass Group creditors who were left stranded.
Spence was bankrupted in 2018.
One estimate puts creditor losses at $2.4 million. In the District Court, Spence was sentenced to five years three months’ imprisonment for multiple breaches of both the Companies Act and the Insolvency Act. This sentence was reduced on appeal by 18 months. The most serious charges Spence faced carried a maximum sentence of five years. At sentencing, the starting point should have been five years before making deductions for mitigating circumstances, the Court of Appeal ruled.
Spence v. R. – Court of Appeal (30.09.21)
21.159