By SIMON HENDERY
Bankrupt entrepreneur Jihong Lu is understood to be facing a further legal challenge as fallout from a failed Malaysian share transaction continues.
The Auckland businessman's former associates, John Brabazon and ex-Skellerup chief Murray Bolton, are believed to be behind the move.
On Wednesday, in the High Court at Auckland, Mr Lu was adjudged bankrupt after an application by Malaysian engineering firm MESB over a $2.5 million debt relating to a failed share deal.
The transaction involved the 1997 sale to MESB of a controlling shareholding in the now defunct NZ telecommunications company SmarTel.
It was Mr Brabazon who introduced Mr Bolton and Mr Lu to SmarTel with the three jointly taking a 50.1 per cent stake in the company. Both later assigned their shares to Mr Lu in a deal which also now appears to be under dispute.
Mr Lu then entered a deal to sell the shareholding to MESB through a complex series of transactions and was given a $2 million deposit.
But the sale came unstuck for several reasons, including management problems within SmarTel and the Asian economic crisis.
MESB successfully sued Mr Lu for the return of the deposit earlier this year and sought the bankruptcy order after he failed to pay.
Mr Bolton is overseas and could not be contacted last night. Both Mr Brabazon and Mr Lu were unavailable for comment.
The Official Assignee will today begin sifting through the complex business affairs of Mr Lu.
A search of Company Office records shows Mr Lu is a director of 20 New Zealand firms. His largest known asset is a 58 per cent shareholding in the listed property and technology company Savoy Equities, which was behind a stymied bid to develop Auckland City Council's $1.5 billion Britomart project.
Savoy Equities shares fell 3c to 17c yesterday. Even at that price, Mr Lu's stake is worth $6.5 million.
Mr Lu and wife Yoshie Itakura also own at least three residential properties in Auckland, valued at more than $5 million.
His lawyer, Peter Stansfield, had told the High Court that Mr Lu could easily settle the MESB debt by selling his 50 per cent shareholding, worth $10 million, in listed Hong Kong firm Savoy Concepts.
But Master Thomas Kennedy-Grant, who authorised the bankruptcy, said he was not convinced that Mr Lu's assets were worth as much as he claimed.
Debt woes build for bankrupt Lu
AdvertisementAdvertise with NZME.