Auckland IT professional Peter Felhofer was ordered to pay $494,300 damages on liquidation of his company Strongroom Ltd for breach of directors’ duties, after hiring out Strongroom employees to other businesses he owned, leaving employee tax deduction liabilities with asset-less Strongroom.
The High Court was told Mr Felhofer wound down Strongroom’s business after losing several major clients in 2017.
He then started up several new companies under the brands ‘Craniums’ and ‘The Computer Guys.’ For what was later explained as administrative convenience, he employed staff for these new businesses through Strongroom, now a shell company, using Strongroom’s existing payroll system.
By 2021, Inland Revenue was chasing Strongroom for PAYE, Kiwisaver deductions and student loan repayments supposedly deducted from employee wages but not forwarded to Inland Revenue.
Evidence was given that Mr Felhofer’s related companies notionally reimbursed Strongroom for net wages these related companies paid to staff supposedly on hire from Strongroom.
Strongroom received no reimbursement for employee tax deductions owed Inland Revenue.
This improved cashflow for his related companies, but left Strongroom exposed for unpaid employee taxes.
With Strongroom now in liquidation, liquidators found no assets and a trail of unpaid debts totalling nearly $494,000; almost all this owed Inland Revenue.
Strongman’s accounting records were described as inadequate. Accounting transactions recorded with Xero remained unreconciled.
Justice Becroft ruled Mr Felhofer failed to comply with multiple Companies Act director duties, including: failing to act in good faith; incurring debts the company could not pay and failing to keep proper accounting records.
Not having related companies agreeing to reimburse Strongroom for employee tax deductions amounted to reckless trading.
Mr Felhofer did not defend the liquidator’s claim.
Strongroom Ltd v. Felhofer – High Court (27.02.26)
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