Councils withdraw liquidation opposition

"The liquidators undertook an investigation and reviewed documents that sufficiently satisfied [the councils] as to the bona fides of the mortgage security and lending arrangements." Liquidation report

The Palmerston North City Council has abandoned plans to get liquidators booted from controlling a property company that is set to leave creditors more than $700,000 out of pocket.

The issues relate to Farm Holdings (4) Ltd, a company previously owned by developer Les Fugle who who has had multiple run-ins with the city council over plans to develop land on the outskirts of Palmerston North. However, he was not a shareholder at the time of the liquidation application.

The council had applied for the company’s liquidation but its application became moot when the company’s shareholders voluntarily liquidated it, appointing Imran Kamal and Mohammed Mazhar as liquidators. The move was made as the council was taking legal action against the company, according to a liquidation report.

The council, along with Horizons Regional Council, soon applied to have them both removed as liquidators, claiming they were trying to avoid a robust investigation of the company’s affairs.

In a court affidavit, council general manager Peter Eathorne said the council suspected a mortgage over Farm Holdings’ land was a ‘‘sham’’ debt designed to ‘‘[extract] assets from Farm Holdings at the expense of the company’s legitimate creditors’’. But, according to the latest liquidation report for Farm Holdings, the councils have withdrawn the legal action. The city council has been approached to confirm this.

The liquidators’ lawyers met with the councils’ to discuss the mortgage concerns. ‘‘The liquidators undertook an investigation and reviewed documents that sufficiently satisfied [the councils] as to the bona fides of the mortgage security and lending arrangements,’’ the liquidators said in their report.

The only asset it had was land, which had a mortgage and Environment Court enforcement orders against it. Attempts were made to sell the land, but no-one wanted to buy it because of the enforcement orders, the liquidators said. As no money was going to be made from the land, none of the creditors would be getting paid. The liquidators report showed $719,259.18 was owed to creditors.