Property developer loses appeal over restrictions on discharge from bankruptcy

WELLINGTON: A Christchurch property developer who was bankrupted twice has failed in his appeal against a judge’s decision to restrict his ability to manage a business and accrue debt.

David Ian Henderson was bankrupted for the second time in 2010 owing $100 million$150 million, but the High Court discharged the bankruptcy early this year.

The discharge came with restrictions, including that Mr Henderson could not control or manage a business for the next six years, personally guarantee the debts of any person or entity, or be employed by a business controlled by his relatives.

The ruling, published last year, said Mr Henderson’s 2010 bankruptcy had been caused by personal guarantees given to cover company and associates’ debts, and his inability to pay tax.

Mr Henderson took the matter to the Court of Appeal to argue the judge’s process for deciding on restrictions.

Henderson’s lawyer, Dale Lester, pointed to a section of the discharge judgement, which said ‘‘none of the particular aspects of postbankruptcy conduct alleged against Mr Henderson would, if established, either individually or collectively justify the extending of his bankruptcy beyond six years’’.

Mr Lester said the judge considered any finding against Mr Henderson’s postbankruptcy behaviour would not affect the restrictions, but he had not taken into account how a finding in Mr Henderson’s favour would affect it.

In the Court of Appeal’s decision, released yesterday, Justice Rhys Harrison said Mr Henderson had an ‘‘unusually active history in both . . . criminal and civil litigation’’.

Justice Harrison said Mr Henderson consistently failed to meet his personal taxation liabilities to the IRD, and would file returns recording nil income and nil expenses. His companies also diverted PAYE and GST payments.

When it came to the discharge judgement, Justice Harrison said allegations Mr Henderson had breached certain prohibi tions and received undisclosed income after his bankruptcy were ‘‘inconsequential’’ and ‘‘did not go towards the core risk which Mr Henderson presented to the commercial community or the wider public interest’’.

Justice Harrison said a finding on the allegations could not have affected the permanent prohibition on Mr Henderson giving any personal guarantees, and it could not have affected the sixyear ban on managing or controlling a company or acting as a business director.

As for the claim the judge had shown bias towards Henderson, Justice Harrison said the submission ‘‘could not possibly succeed’’, and that if anything, the judge’s decision not to look at the allegations was likely favourable to Mr Henderson.

The appeal was dismissed and Mr Henderson was ordered to pay costs. — NZME