Pero ‘not able’ to pay debt

Real estate kingpin Mike Pero says he hasn’t got the cash to pay back over $2 million he misappropriated from a joint venture company.

His financial plight came to light this year in his court bid to suspend enforcement of the $2.38m debt until other legal action was completed.

He owes the money to the joint venture company which owns the Mike Pero real estate business. His

50 per cent partner in the business is the mortgage company Mike Pero Mortgages Ltd which is fully owned by the Liberty Financial Group, a Melbourne-based financial services company controlled by Las Vegas businessman Sherman Ma.

Pero told the High Court in Auckland in February his only assets were shares in the real estate business, a national chain of franchised agencies.

He did not dispute his liability or the amount he owes, but said the millions the court found he ‘‘misappropriated’’ were spent on legal fees.

The High Court granted Pero’s application and postponed enforcement of the debt until legal action on a related issue is completed.

Justice Mary Peters said she had been persuaded an ‘‘irreversible alteration to the status quo’’ would occur if the debt was enforced pending the completion of further legal action. Such an alteration would be a ‘‘substantial miscarriage of justice’’.

Pero wants the real estate business, of which he is the chief executive, to declare a dividend of

$5m and to take his debt from those proceeds. Liberty opposes that course.

The debt springs from a joint venture Pero entered with Liberty in 2011 to set up a new real estate business using his name.

Liberty had previously bought Pero’s mortgage broking business and owns the ‘‘Mike Pero’’ trademark. Liberty provided all the start-up capital for the new real estate company and gave permission for the use of the Mike Pero name.

Ma thought Pero had ‘‘a lot of talent’’ and was a ‘‘shrewd marketer’’, court evidence shows.

The court action to find out whether the dividend should be declared has yet to be completed.

Pero told The Press the real estate chain was trading well and had significant financial resources. He expected the latest court action to be resolved by the end of the year.