Bad debts sting city ratepayers

Palmerston North ratepayers are out of pocket after the council wrote off hefty bad debts owed by a failed inner-city restaurant and de-registered land company.

Bethany’s Ltd, which ran Bethany’s restaurant until last year, owed Palmerston North City Council $22,607 – mainly in rent for its site on The Square.

Bethany’s is still operating under new management.

Aokautere land development company Farm Holdings (4) Ltd owed $22,249 in costs related to land resource consent bids.

The council’s finance and performance committee has recommended the debts from both firms be written off. The amounts were too large for staff to deal with under delegated powers.

Staff can write off debts of up to $8000. Amounts bigger than that need councillors’ approval.

Financial accountant Keith Allan said Bethany’s had significant preferential creditors ahead of the council waiting to be paid.

The eatery – named for founders Reuben and Lynne Leung Wai’s eldest daughter, who died from bone cancer in 2005 – had about $700,000 in debts when the company went into liquidation.

The council’s chief financial officer, Grant Elliott, said there was nothing officials could do to get money from the de-registered land development company.

Both the city council and Horizons Regional Council had tried to stop the liquidation of Farm Holdings but were foiled when shareholders acted voluntarily.

Allan said the council had recovered enough money on other overdue bills to more than cover the debts.