Liquidators set to 'freeze' assets of Eric Watson's Cullen Group

The company was moved into the hands of KPMG liquidator Vivian Fatupaito last week. Photo / File

Liquidators of Eric Watson's Cullen Group are working to identify and freeze the company's assets.

In the liquidators' first report published on Christmas Eve, KPMG's Vivian Fatupaito and Luke Norman said they were "still working to understand the extent of the assets held within the group".

Cullen Group was placed into liquidation by court order, meaning it might no longer fight a $112 million tax judgment against it, on December 17.

Fatupaito and Norman in their report said there were a significant number of related party transactions that they needed to access still.

They have requested more information from a number of parties, including Watson and the IRD, and have appealed for creditors to come forward.

"Since their appointment the liquidators have worked to identify, freeze, and control the group's assets by placing entities within the group into liquidation," the liquidators said.

The liquidators have also requested anyone with information on Cullen Group's management to get in touch: "Liquidators can only act on written information as undocumented information is deemed to be hearsay only and is inadmissible in court."

It is not yet known exactly how much Cullen Group owes creditors.

It was last month reported that the group owed the Inland Revenue Department and Kea Investments about $100 million each.

IRD had been pursuing the Cullen Group's liquidation after Justice Matthew Palmer ruled in March this year that Cullen Group was part of Watson's "web of entities" designed to avoid paying non-resident withholding tax.

While Cullen Group is appealing and a date is set for February next year, the IRD sought the payment of about half a million dollars in costs in the meantime.

Last month, Justice Palmer refused a request from Cullen Group to halt the IRD's liquidation proceedings against it.

In that proceeding, Cullen's lawyers said it didn't have enough money to pay the IRD but was in the process of trying to sell debts owed to it by Hart Acquisitions in the United States.

They also said that a liquidator wouldn't continue with the appeal.

Evidence before the court said Cullen Group's financial statements showed negative equity of $203 million, but the IRD's lawyer said the amount could be paid if Cullen Group hadn't structured its affairs so the debt sits in a now insolvent company.

"The costs award, owing for almost eight months, should not be enough to tip Cullen Group into insolvency and liquidation unless those controlling Cullen Group, including in particular Mr Eric Watson, wish it to do so," the judge said at the time.

"But a party owing costs under a judgment cannot force a stay of the judgment by effectively threatening its own liquidation. Rather, that appears to be a reason in favour of liquidation, and against a stay, to enable enforcement of the judgment."