Published 23 April 2012
A High Court judge turned down insolvent entrepreneur Andrew Tauber’s debt compromise scheme today, but nobody was available to take the consequent step of bankrupting him.
Mr Tauber succeeded in getting the required creditor majorities by number & value in support of his proposal in December. But the liquidators of APG Holdings Ltd (ex-Corporate Events Ltd) were left out in the cold, with their $13 million claim rejected.
The proposal to pay an overall 1.6c:$1 – or 1.3c:$1 if APG was included – went before Associate Judge Roger Bell for approval today. The scheme involved debts of about $90 million (the figure changed during the day, depending on what was or wasn’t included), most of sheeted home to Mr Tauber from guarantees.
At the start of the hearing, counsel for Dominion Finance Group Ltd (in liquidation & receivership), Claire Mansell, withdrew that company’s application to bankrupt Mr Tauber and told the judge the company’s position would remain the same if the debt compromise scheme was rejected.
After the hearing, Mr Tauber said there were no outstanding applications to bankrupt him, so he’s neither bankrupt nor required to pay into a scheme for his creditors. Associate Judge Bell told counsel for APG it could take up to a year to get its substantive case to a hearing, and it won’t be in a position to apply to bankrupt Mr Tauber until that’s decided.
During today’s hearing, Associate Judge Bell commented several times on the way Mr Tauber arranged his affairs to ensure that, if he had to carry any liability, guarantees aside, he would have minimal personal exposure because he would have minimal personal assets.
“When he sets up a trust, he sets up a corporate trust most of the time. If the trust has a liability, it’s a corporate liability and the corporate trustee would have an indemnity.”
Later the judge said that if APG’s liquidators got judgment against Mr Tauber, “I am sure they will find the cupboard bare”.
This “deliberate policy of minimal accountability” meant Mr Tauber wouldn’t have to answer fully for liabilities he incurred. “He has liabilities of $80 million or so, signs his guarantees then tells his creditors $10,000 is all they will get.
“Added to that, the liquidators have also adduced evidence regarding Mr Tauber’s accommodation arrangements. He lives in the Shangri La apartments (in Herne Bay), in an upmarket apartment. Evidence the liquidators have obtained is the apartment is worth $2 million and is owned by his wife & a lawyer. I infer there is some kind of trust there, in which Mr Tauber has no interest as trustee or beneficiary, but he is able to live there without accounting to his creditors.”
Associate Judge Bell said there was a general public concern that failed businessmen could carry on living the high life, but pay little back to their creditors: “There is a proper basis for the indignation within the community. When a man such as Mr Tauber adopts a policy of reduced accountability, it is appropriate that the court says you incur bankruptcy because that is the consequence when you do adopt such a policy.
“Accordingly, in my view there are also good grounds why this proposal should not be approved. It would be rewarding Mr Tauber for adopting his policy of reduced accountability.”
This story doesn’t contain any of the submissions of APG counsel Murray Branch or counsel for Mr Tauber, Mike Whale. I’ll follow up with that, plus some more of the judge’s comments, in the morning.
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Attribution: Court hearing, story written by Bob Dey for the Bob Dey Property Report.