A Far North District councillor won't fight bankruptcy proceedings against him, saying he simply cannot afford to stump up the more than $800,000 he's been ordered to pay by the High Court.
The High Court at Whangarei is likely to issue bankruptcy orders against Steve McNally on April 9 after an earlier offer to pay only $50,000 of the $856,353 was rejected by FM Custodians, Fund Managers Auckland and Auckland Mortgage Trust.
Mr McNally, a former director of McNally Valuation (2000), which went into liquidation in 2011, valued a property in the Bay of Islands before FM Custodians lent about 70 per cent of the valuation price to the new home owners. FM Custodians owns more than 75 per cent of the debt while the rest is owned by Auckland Mortgage Trust and Fund Managers Auckland.
The homeowners could not keep up with the repayments and the lenders lost money after the house was later sold at a lower price because the housing market was down.
FM Custodians alleged Mr McNally overvalued the property and it obtained a High Court judgment against him of $856,353 in June 2012.
Mr McNally argued he could afford to pay only $50,000 over five years but FM Custodians refused his offer and served a bankruptcy notice on him.
On January 30, Associate Judge Roger Bell allowed FM Custodians, Fund Managers Auckland and Auckland Mortgage Trust 10 working days to institute bankruptcy proceedings.
The High Court yesterday confirmed the trio have filed an application for an adjudication order which would be heard on April 9.
Mr McNally said it was futile to challenge the creditors' application because he had no money.
"There's nothing I can do about it. I can't continue to trade as a professional valuer because I can't get indemnity insurance."
He earlier argued in court that the loan for the Bay of Islands property was not good lending and that no regard was given to the flexibility of servicing the debt.
He said his involvement was minor and he had not had any power to influence the lenders' decision.
"These guys [lenders] just want to see me washed up the beach," he said outside court.