The High Court has put Auckland apartment developer Du Val Capital Partners and other Du Val Group companies into interim receivership. Video / Alex Burton
The last time Cabinet made an order to appoint statutory managers to run a private company was 14 years ago, Commerce and Consumer Affairs Minister Andrew Bayly confirmed after yesterday’s move against Du Val Group.
Back then, Cabinet did it three times – twice against entities associated withthe ill-fated South Canterbury Finance and its founder, the late Alan Hubbard.
Last night’s order against Du Val Group (already in interim receivership), signed by Governor General Dame Cindy Kiro, was an extremely rare step, Bayly said today.
But it was a move he and the Financial Markets Authority backed.
Bayly said statutory management was only used in situations where complexity and scale meant immediate government intervention was required “to prevent broader harm”.
The Corporations (Investigation and Management) (Du Val Group) Order 2024 was passed by Cabinet yesterday, then given Kiro’s seal.
It is passed under the Corporations (Investigation and Management) Act 1989 on the advice of Bayly, following a recommendation by the Financial Markets Authority.
“Statutory management is the option of last resort used to deal with complex corporate failure where ordinary insolvency law is inadequate. It is intended to protect investors and creditors from further losses and to enable the orderly administration of a company’s affairs,” Bayly said.
The Herald put a series of questions to Bayly about the Du Val situation.
Commerce and Consumer Affairs Minister Andrew Bayly during the Beehive press conference two days ago. Photo / Mark Mitchell
Q: How concerned are you about the Du Val Group and its financial activities?
“Three reasons: it’s a large complex group with several entities. There is the risk and it’s already starting to happen with multiple liquidators seeking to enforce their position so it’s important to bring a process where those would cease and someone could bring about a more orderly outcome and, thirdly there have been allegations of misconduct so there’s a number of reasons.”
Q: Have you seen the PwC initial receivers’ report which went to the High Court at Hamilton last Friday?
“I certainly had significant advice from the FMA in making a decision like this. I have had access to information, yes.”
Q: How worried were you as a minister when you read that PwC report?
“I made that recommendation based on advice received to date.”
“It is obviously serious enough for me to take the recommendation and seek Cabinet approval. What we’re very keen on is protecting the interests of all creditors. There are a number of developments and we want to ensure where possible, that they are completed. You don’t go on a journey like this without significant concerns.”
Q: Do you know if or when that PwC report on Du Val will be released?
“No. It’s not clear at this stage but I wouldn’t imagine it’s too far away. It’s a court matter.”
Q: What discussion was there in Cabinet about passing the Order in Council against Du Val?
“I don’t want to talk about what was talked about in Cabinet but on the decision to support statutory management, it’s important we establish a case for it.”
Q: What will happen to Du Val founders Charlotte and Kenyon Clarke?
“We will all know in time and certainly there’s a role of PwC as the statutory manager to find out what’s gone on and bring about an orderly resolution.”
The last time statutory managers were appointed in New Zealand was before 2011 when the FMA was formed, soon after the global financial crisis.
The late South Canterbury Finance founder Allan Hubbard (right) and former chief executive Lachie McLeod.
It was in 2010 and a spokesperson for Bayly outlined three cases:
Aorangi Finance, seven charitable trusts, Allan Hubbard and wife Margaret Hubbard: Finance company run by Hubbard that made loans of approximately $134 million unlawfully funded by deposits received from 407 investors in Otago and Canterbury. Statutory management was required due to the informal nature of the advances and the complexity of tracing securities and ownership of assets;
Hubbard Management Funds: Two companies that held assets connected with Hubbard Management Funds, which was a funds management business run informally by Hubbard through his accounting firm, which had raised funds unlawfully from around 300 investors, and had assets of approximately $82m;
Idea Services: Two subsidiaries of IHC New Zealand Inc, provided residential care services to around 2700 people with intellectual disabilities and other services to around 9000 people and their families. Statutory management was recommended in the public interest to preserve the continuity of services by the companies.
Anne Gibson has been the Herald’s property editor for 24 years, written books and covered property extensively here and overseas.
