Hotchin's Hanover making demands on Allied Farmers?
The residual Hanover Finance, still directed by Mark Hotchin, appears to be demanding payment of $500,000 from Allied Farmers in a move that could put the latter company under.
Allied says a deadline to pay the sum plus interest of $40,000 has expired. “The next step would be applying for orders appointing liquidators to [Allied farmers and Allied Farmers Investments],” the company says.
Allied has not named the identity of the lender, however in its latest accounts it notes $500,000 of debt to Hanover Finance secured on a loan asset of Allied Farmers’ Asset Management Services Group.
That debt appears to have been left on Allied’s books following settlement of a $5 million payment for costs associated with the debt for equity swap that saw Hanover and United Finance’s loans and property assets transferred to Alllied back in December 2009.
The $5 million related to Hanover’s costs of exiting the business including tax and contingent liabilities arising from pending litigation.
The settlement was made in 2011 between Allied and HF Residual Obligations Limited, owned by one of Mark Hotchin’s associated trusts.
Mr Hotchin is the company’s sole director.
Back in December 2009 Allied ascribed a $396 million value on the Hanover assets, but quickly wrote them down to less than $90 million. It then sold off assets at depressed prices in order to pay down its own debts, which had threatened to sink Allied Farmers before the Hanover deal.
Allied’s then managing director Rob Alloway complained the assets, including those introduced by Hanover shareholders Mr Hotchin and Eric Watson, were in far worse shape than they appeared during Allied’s “due diligence.”
When Allied took over the Hanover and United assets it told debenture holders, owed more than $550 million, that deal was the best chance they had in getting their money back.
Instead the shares they were issued are now worth less than one cent, with liquidation a real possibility.