NZF Homeloans sale 'grossly undervalued'

Collapsed lender NZF Money's receivers allege shares in NZF Homeloans were sold to NZF Group for $1000, when they were worth $3 million.

The receivers are seeking up to $1m in damages.

As reported last week, KordaMentha's Brendon Gibson and Grant Graham, the receivers of NZF Money, had successfully sought an interim court order freezing NZF Group's assets, although the court gave NZF Group leeway to pay up to $100,000 in expenses.

A High Court minute from Justice Mary Peters, issued on April 5 and released to NBR Online today, says Mr Graham and Mr Gibson were concerned NZF Group had sold shares at a grossly undervalued figure.

"The purchase price for the shares was $1000," the minute said.

"The receivers consider a fair price for the shares would have been in the region of $3 million."

The subsequent sale of the shares to another company, Resimac Ltd, supports the receivers' concerns, the minute says.

It also names the defendants in the receivers' action as NZF Group, Pat O'Connor, Mark Thornton, Peter Huljich, John Callaghan and Richard Waddel.

Mr Huljich resigned as a non-executive director and chairman of NZF Group last year. In December, he was convicted and fined $112,632 after pleading guilty to misleading the public in the investment statements issued for Huljich Wealth Management's Kiwisaver fund.

Common directors

Justice Peters' minute says NZF Money and NZF Group had many, "if not all", directors in common at the time of the NZF Homeloans share sale in November 2010.

NZF Group made undertakings to the receivers on April 5, but the receivers were not willing to accept them and sought orders.

Justice Peters says: "I decline to accept the undertaking or assurance given because I do not consider [NZF Group lawyer Phil] Rice has had sufficient time to consider this matter with his client and to take full instructions."

The minute said KordaMentha had filed an undertaking as to damages limited to $1m.

Mr Gibson's affadavit, as referred to by Justice Peters, said NZF Money's creditors were likely to suffer a significant shortfall because of the NZF Homeloans sale. 

"The receivers wish to ensure they preserve all assets to which the plaintiff is entitled, for the benefit of those creditors," Justice Peters' minute says.

A further hearing is due next week.

NZF Group previously said it will “rigorously defend” the proceedings.

Last month, the Serious Fraud Office opened a second round of investigations into alleged related-party transactions involving NZF Money and the NZF Group.

NZF Group says it has no knowledge of the transactions at the centre of the SFO probe.