Published 18 May 2009
Property developer Greg Olliver, the founder of Landco Ltd, has had his debt-compromise proposal with creditors approved, against the opposition of St Laurence Funding Ltd.
The proposal is expected to yield less than half a cent in the dollar on about $92 million of debt (initially $125 million, recently reduced to $81 million). The worst-case minimum scenario is a return of 0.43c/$ over 4 years.
St Laurence went to the High Court to stop the proposal, but Associate Judge John Faire concluded there was nothing flowing from Mr Olliver’s specific business or other transactions which would justify refusing the proposal.
The judge said in his decision: “There is a suggestion in the papers (filed by St Laurence) that Mr Olliver may have manipulated the position whereby interests associated with his wife have been able to acquire, on a forced-sale basis, the properties at Waimarie St. I do not consider there is a foundation for this proposition.”
The judge said sale & assignment prices simply reflected the market.
Although Associate Judge Faire approved the proposal on 13 May, he has listed the other part of the court case – an application to bankrupt Mr Olliver – in his next bankruptcy list, Thursday 4 June at 10am, for mention because this was an agreed course of action. But the judge said he expected the bankruptcy petition to be dismissed.
The judge said Mr Olliver’s insolvency arose from development funding guarantees. Developments were hit by delays in getting consents in mid-2007. The present economic climate & lack of development finance had led to a significant reduction in value of the properties.
Mr Olliver said his only assets were the shares in 3 companies, which had no appreciable value because they were bare trustees. He was the settler, appointor &/or a discretionary beneficiary of 5 property-owning trusts, but Mr Olliver said the mortgages on them exceeded their likely current value and were in default.
The only income derived from the trusts or companies was a consultancy fee & income from a company running a Marlborough farm. The farm income went straight to South Canterbury Finance Ltd while the $525,000/year consultancy fee, for 2 years, was paid to a company whose shareholding had been moved to Mr Olliver’s wife’s trust. Associate Judge Fair accepted evidence that Mr Olliver had no interest in that trust and wasn’t a beneficiary of it.
Court approval of his proposal means Mr Olliver must hand over $100,000 for distribution among his creditors, followed on the next 3 anniversaries of the approval by further payments of $100,000 or 50% of his net after-tax earnings for the previous year, whichever is greater.
Mr Olliver’s creditors filed proofs of debt totalling $92.6 million, but since the 5 March creditors’ meeting $11 million had been realised, including $7.8 million by NZ Guardian Trust Ltd & $2-2.5 million b y Westpac NZ Ltd.
When the proofs of debt were filed in March, Commonwealth Bank of Australia was owed $31.7 million, South Canterbury Finance $16.9 million, Guardian Trust $11.5 million, Westpac $6.5 million, Auguste Holdings Ltd (owned by St Laurence group controlling shareholders Kevin Podmore & Mike O’Sullivan) $6.5 million and St Laurence Lending $6.8 million.
Mr Olliver won 13 votes out of the 18 creditors (72.22%) & 77.49% by value, with the 2 St Laurence companies & Westpac the main opponents. Associate Judge Faire said the proposal did produce a benefit and added: “I cannot find anything in the proposal which effects a specific disadvantage to the minority who voted against. That is primarily because Mr Olliver has no assets and, if in fact he is adjudicated (bankrupt), there will be no distribution at all.”
Mr Olliver’s primary business for several years, the Landco property development company, was a joint venture between him, through the Pheonix Trust, & the Todd Group. St Laurence became involved in its refinancing in 2007, but in early 2008 Todd ousted Mr Olliver.
Fortress Investment Group had provided a $125 million subordinate facility to Landco, of which St Laurence Lending bought 20%. After repayment & refinancing, St Laurence Lending advanced $6 million to Mr Olliver’s BBG Trust, which had plans to redevelop much of the slope above the St Heliers business area with luxury townhouses.
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Attribution: Company statement, story written by Bob Dey for the Bob Dey Property Report.