Hartner rugs pulled out from under

By ANNE GIBSON Property Editor

When Wayne Hartner of Hartner Construction said he stood to lose all his fortune, he was not joking. Even the living room mat is being pulled out from under him as his empire is cashed up.

Documents just filed in the High Court at Auckland reveal that household furniture owned by Gaile and Wayne Hartner is being sold to repay less than half of the money owed to the people who built the couple's new Epsom house.

Some of the creditors are trying to have the Hartners declared bankrupt, but the couple have filed a statement of their financial affairs and a proposal under part XV of the Insolvency Act.

The statement shows that the Hartners lent $4.9 million to family trusts and "related parties," money that cannot be touched by unsecured creditors, but which the National Bank has first call on.

The documents filed in the High Court promise the 60 creditors who built the mansion at 28 Golf Rd a payment of 43c for every dollar owed, as long as they do not have the couple declared bankrupt, in which case they are being threatened with being paid only 5c for every dollar owed.

Selling the Hartners' household furniture, jewellery and antiques would realise $20,880, the documents show. Beds, televisions, tables, ornaments, two mats, an exercise walker, baby grand piano, lamp tables - all are to be sold.

The documents show that Mr Hartner, a company director of 28 Golf Rd, declared total assets of $191,552, including $912 cash in the bank. Mrs Hartner, a company director of the same address, declared total assets of $192,386, including $1146 cash in the bank.

Their statement of affairs shows the two personally owe $7.6 million, including over $700,000 to the creditors who supplied materials and labour on the Epsom house.

But as well as the money for the house, they listed $30.1 million pledged in personal guarantees to other creditors, all financiers.

The $30.1 million includes a $3 million personal guarantee by the Hartners to American Reinsurance for the Hartner Construction bond, $10.3 million to ANZ Banking Group for Apex House in the Viaduct Basin and the Viaduct Carpark, $304,000 to Elders Finance for

The Reef apartments in Mt Maunganui, $750,000 to LS Capital on Apex House and $15.7 million to the National Bank for Hartner Group, bonding facilities and the mirror trusts.

From that $30.1 million in personal guarantees, only $6.8 million is listed as being the Hartners' estimated liability - $1.6 million to American Reinsurance and $5.2 million to the National Bank.

As well as these debts, the total debts of Hartner Construction and Hartner Group have been estimated at $28.5 million, owed mainly to subcontractors and suppliers on various building projects in Auckland, Mt Maunganui and Wellington.

In the financial position statement, the Hartners say they have lent $3.3 million to their own trust - the GA and WF Hartner Trusts. In all, they have lent $4.9 million to family trusts and businesses.

But lawyer Keith Young of Jones Young said most of the assets in those trusts had charges over them to the lender, National Bank. So once it had called up its charges, no money would be left for unsecured creditors - including Wayne and Gaile Hartner - of the various trusts, he predicted.

While the 60 who worked on the Epsom house are being promised 43c, the 1002 creditors who supplied materials or labour for Hartner Group and Hartner Construction are being promised nothing.

Mr Young of Jones Young said this was "just one of those things, and unfortunate." But he said payments depended on who people were contracted to work for. Those who worked on the Hartners' house were contracted to work for Mr and Mrs Hartner, he said, whereas those who worked on the Hilton Hotel were contracted to work for Hartner Construction. Therefore, the offer in the proposal did not amount to a preferential payment.

Hartner Construction is in receivership and liquidation, and creditors are unlikely to get any of their money back. First debenture holder National Bank is expected to recover some of its money.

Some of the 60 creditors of Wayne and Gaile Hartner, who supplied materials and labour for the house, said they did not entirely agree with the proposal filed in the High Court, particularly the clause that said the settlement would be a full and final one.

The creditors, who wanted to remain anonymous, said they would not agree to this clause and would seek to have it changed as they hoped to receive more money eventually.

Jeff Meltzer is the provisional trustee for the proposal and creditors will meet to vote on it in Remuera next Wednesday. For the scheme to work, the National Bank has agreed to waive its security over a 1999 BMW 750i sedan jointly owned by the Hartners and expected to sell for $120,000, as well as its claim over the $240,000 marina berth at pier T, number 41, Westhaven.

The single largest creditor on the Epsom house is an associated company, Hartner Joinery, owed $111,000, followed by Colin McKenzie, owed $102,000 (disputed).

Some of the other 60 creditors are Action Sports ($43,000), Air Accent ($23,000), D Allen Decorators ($26,000), Herberts Builders Hardware ($18,000), D & H Aerial ($22,000), Dickson Gray ($51,000), Modus Lighting ($33,000), Moselen Construction ($67,000), Papakura Joinery ($20,000), Seaboard Joinery ($20,000) and the Tile Warehouse ($29,000).