New Zealand High Court Orders Liquidation of 23 More Chance Voight Companies

The New Zealand High Court has placed 23 additional companies linked to Bernard Whimp into liquidation, the Financial Markets Authority (FMA) announced on Monday. The order, made on September 10, covers the remaining entities of the Chance Voight group, which was run from Rangiora, north of Christchurch.

The liquidation affects 21 companies and two limited partnerships, including Hanmer Equities Limited, a subsidiary that was named alongside Whimp in asset preservation orders granted last December when the FMA first took action against the group.

John Fisk, Lara Bennett, and Malcolm Hollis, who were appointed interim liquidators over six Chance Voight entities in December, are now liquidators of every company in the group.

According to The Press in July, citing the FMA, the companies had received about NZ$45 million (approximately $26 million) from investors. An interim liquidators' report put the group's net asset position at close to negative NZ$12 million, RNZ reported from the June hearing.

New Zealand High Court: Court Findings and Grounds for Liquidation

The court split the 23 entities into two groups. Those with bank accounts were found insolvent, unable to pay debts as they fell due. The remaining entities, which had no bank accounts, were placed into liquidation on just and equitable grounds because treating them as separate from the group was artificial and because a single process is more efficient, the FMA said.

At the June 29 hearing on the first six companies, FMA counsel Richard May told the court that records reviewed by the interim liquidators showed interest payments, and in some cases redemptions, had been funded mainly from new investor money.

Whimp did not attend that hearing and had no lawyer present. His last-minute application to delay it was declined. Associate Judge Lester released his decision on July 23.

Margot Gatland, head of enforcement at the FMA, said the judgment recognises that the active entities are insolvent and that one process protects investors and creditors. The FMA's investigation into the group and associated parties is continuing.

Background on Bernard Whimp

Whimp was banned from managing or directing companies for five years from April 2007 under the Companies Act. Companies Office records list convictions under that act for failing to comply with a liquidator's notice and for removing records. The same records list a burglary conviction, for which he was sentenced to 250 hours of community service.

While the ban was in effect, he used limited partnerships, which the ban did not cover, to make unsolicited offers for shares held by retail investors in Vector, Contact Energy, TrustPower, Fletcher Building, Guinness Peat Group, and DNZ Property Fund. Several of the March 2011 offers appeared generous but spread payment over ten years, reducing their value. The Securities Commission, the FMA's predecessor, ordered the partnerships to inform every shareholder who had received an offer that the original statement was misleading.

Whimp has rejected the regulator's case throughout. In an email to investors after the December action, he denied the companies were insolvent and said the funds held about NZ$50 million in deposits. He also said the funds had never missed a quarterly interest or principal payment and that no investor had complained to the FMA in six years. "FMA did not issue Chance Voight funds with any warnings or orders ...," he wrote.

The regulator did not pursue Chance Voight through license conditions. Instead, it asked the court to wind up the companies on insolvency grounds, on Companies Act breaches, and on the just and equitable test. Inland Revenue had already won a liquidation order over CVI Management Services LP in July. That partnership is named again in the September 10 judgment.

The asset preservation orders from December remain in effect. They prevent Whimp from moving assets overseas, though the FMA said at the time that they do not otherwise restrict his use of personal assets.