Petricevic trust chased for $800,000

Rod Petricevic's family trust and the Official Assignee are embroiled in a dispute over $800,000 paid to the trust during the two years before his bankruptcy in August 2008.

The heart of the case lies in the Official Assignee's allegations that Petricevic was insolvent at the time he made the payments.

It is also alleged:

* He gave his family trust - of which he is still a trustee - preferential treatment.

* The value of the rent paid for a house owned by the trust was higher than market value.

Petricevic was director of Bridgecorp when the company collapsed in 2007 owing 14,500 investors almost $460 million.

The Official Assignee alleges Petricevic gave the trust preferential treatment over his other creditors by repaying a loan of $500,000 between August 2006 and August 2008.

Guy Caro, the Official Assignee solicitor, said Petricevic was insolvent when he repaid the trust and therefore any payments made during the two years before his bankruptcy should be returned to be divided equally among all his creditors.

Petricevic also made rent payments of about $300,000 to live in a trust-owned house.

Mr Caro said the amount the Official Assignee could get back was not "set in stone" and it was up to the court to decide how much would be refunded.

However, lawyers representing the RM Petricevic Family Trust yesterday argued under which law the proceedings would be heard as in 2006 the Official Assignee was given greater powers by the Government under the Insolvency Act.

The trust's lawyer Bruce Stewart, QC, said several payments were made before the 2006 law was introduced so the case should be tried under the older 1967 legislation. He said the Official Assignee had to prove Petricevic couldn't pay his debts in the two-year lead-up to his bankruptcy in order to be able to claim the money.

Mr Stewart said once a person was made bankrupt everything goes to the Official Assignee, and that a person can earn money through wages but it takes a cut.

He said you need to pay all your creditors back equally; "you can't pick and choose who you repay".

He said the money the Official Assignee was seeking was not Petricevic's money anymore but the trust's.

"He paid his family trust ahead of other creditors. There is no question that he owed the money to the trust," he said.

Justice Duffy reserved her decision on which act will be used to hear the case.

In 2008, Bridgecorp receivers PricewaterhouseCoopers' application to have Petricevic bankrupted, for the $666,186 he owed creditors for a personal tax bill the company paid for him in September 2006, was successful.

FUTURE BUSINESS DEALINGS

Bankruptcy conditions:
* May not be a company director.
* May not manage a business without official approval.
* May not be employed by a relative without official approval.
* May not leave New Zealand without official approval.
* Must disclose bankruptcy status for any credit above $1000.