KEY POINTS:
The trustee of Terry Butler's Dominion Finance Group yesterday confirmed that a liquidator had been appointed in a bid to reverse transactions made just before the business folded last year owing investors $224 million.
DFG's listed parent, Dominion Finance Holdings, was yesterday, unsurprisingly, also placed in liquidation, four
months after going into voluntary administration in the aftermath of DFG's receivership.
But of more relevance to Dominion Finance Group's 6055 investors was trustee Louise Edward's confirmation that she appointed a liquidator to the company late last year.
"They were appointed so that they could investigate transactions entered into by the company prior to the receivership."
Edwards, of Perpetual Trust, said the liquidator had powers to investigate and could seek to reverse "avoidable" transactions under the provisions of the Companies Act.
She could not say which transactions the liquidator was focusing on.
But in the aftermath of the company's failure, the media spotlight fell on a $5.18 million loan made on the last day of the 2008 financial year to a company called WAFD Ltd whose sole director was Dominion director and shareholder Barry Whale.
The loan was almost immediately classed as partially impaired.
Edwards said it was too early to tell whether the liquidator's work would affect the amount of funds recoverable on behalf of investors.
In his initial report last year, receiver Rod Pardington of Deloitte said he expected debenture holders would, over time, get between 10c and 25c in the dollar of their principal back. Unsecured investors will get nothing.
While Pardington said the low level of expected recoveries was in part due to the property market downturn, it was "much more significantly due to the lending decisions made by DFG".
Edwards said Pardington was working alongside the liquidator.
If necessary, transactions being investigated by the liquidator would be referred to the appropriate authorities.
DFG and its parent company are being investigated by both the Securities Commission and NZX.
Another DFH subsidiary, North South Finance, secured a moratorium from investors in December but its trustee, Graham Miller of Covenant Trust, has referred some trust deed concerns to the Companies Office.
DORCHESTER'S EGM 'CHARADE'
Dorchester Pacific Finance, which secured investor approval for a deferred payment plan in December, says it is acting on legal advice to go ahead with the "charade"of voting on the Shareholders Association's stranded proposal to liquidate the firm.
The association pushed for an extraordinary general meeting (EGM) to vote on whether the company should be liquidated after it froze repayments to investors owed $176 million in June. Although the association reached the 5 per cent support threshold needed to force the meeting, the company subsequently gained investors' approval for its repayment plan and the association withdrew its EGM request.
However, chairman Barry Graham yesterday said the board had received legal advice to proceed with the EGM.
"It's a charade to the extent that 44 per cent of our shareholders ... will not be supporting the appointment of a liquidator so it can't happen, but our legal advice is once the meeting is called ... we've got to see it through."
A related Shareholders Association resolution to replace Graham and Paul Byrnes as directors was unlikely to be voted on at the EGM as both will retire by rotation and a vote for their reappointment will be held at the annual general meeting immediately before at 2pm on February 17 at the Ellerslie Event Centre.