Terry Le Sueur’s practice of moving assets from company to company out of reach of trailing liquidators came unstuck with a High Court order health food products sold to related company NFL Foods Ltd be returned.
The asset chase first started with Inland Revenue pressing Le Sueur’s Auckland company Nutra Foods 2011 Ltd for payment of tax debts. It took seven months before Inland Revenue finally forced Nutra Foods into liquidation in February 2022. In the interim, company assets were sold for $250,000 to another company controlled by Le Sueur: Attitude Foods 2018 Ltd.
The High Court was told things began to unravel when Nutra Foods’ liquidators sued Attitude Foods for the promised $250,000.
In July 2023, Le Sueur set up another company, NFL Foods Ltd, and on that same day sold remaining product to NFL for $150,000. Days later, Attitude was forced into liquidation for failing to pay Nutra Foods.
Attitude Foods liquidators successfully sued NFL for return of any unsold product plus the proceeds of sale for stock sold.
Special rules in the Companies Act cover the grey area between the date application is made for liquidation and the date a liquidator is appointed should directors during this period do deals outside the normal course of their company’s business. Such deals are automatically reversed unless done in good faith at market prices. A one-off sale of all company stock is not a sale in the normal course of business.
Justice Downs ruled Attitude Foods was entitled to recover the assets.
While it was Attitude Foods that sued for recovery, the court was told these assets belong to Nutra Foods; Attitude Foods earlier gave security over the assets purchased from Nutra Foods, security for the promise to pay $250,000.
All three companies in the chain were controlled by Terry Le Sueur.
Sprosen v. NFL Foods Ltd – High Court (27.10.23)
23.182