David Henderson, Auckland's most flamboyant and once wealthy developer, will earn a salary of $75,000 if his proposal to avert bankruptcy over a $130 million debt is approved by the High Court.

Henderson was in court yesterday for a hearing on his creditors' proposal. He has come to an agreement with the majority of his creditors, including ex-wife Rochelle, who initially rejected the proposal, but Inland Revenue, owed $3.7 million, and the Bank of Western Australia (BankWest), owed about $33 million, want him bankrupted.

"There is no suggestion that Mr Henderson is dining at a rich man's table while his creditors receive the crumbs. He has lost everything and is going to earn a $75,000 salary. There is no suggestion he has lived an exotic or affluent life [in recent years]," his lawyer Daniel Grove said yesterday.

Henderson is trying to avert bankruptcy through a proposal that will drip feed creditors $1.5 million, or about 4c in the dollar, of a $130 million debt over three years.

He originally owed $166 million but Groves said this had been reduced primarily through the full repayment to Westpac of $28 million.

This was raised by selling his stake in the redevelopment of Victoria Park. He will still be involved in the project but as a contractor.

He is no longer living in his Hilton apartment on the waterfront, after telling the Herald "the bank owns it now".

Grove said the IRD wanted to bankrupt Henderson because he posed a threat to the integrity of the tax system.

This fact was disputed by the defence, which said Mr Henderson had been "frank and full" in declaring his assets, providing the IRD with information on his financial status and taking the stand to be cross-examined.

"His role for the next three years will be to assist development of Victoria Park for $75,000. He is not going to take on any new developments."

Grove said creditors would get a "dividend" if the court approved the proposal, as opposed to nothing if Henderson was bankrupted.

But the IRD says it would be in the public interest for his affairs and assets to be in the hands of the Official Assignee, who is responsible for collecting the assets of a bankrupt and distributing them to creditors.

Grove said there was no suggestion Henderson had acted recklessly or imprudently.

The tough economic climate and subsequent crash of the property market have been blamed for the demise of his property empire.

"It is for the creditors to vote whether they want it [the proposal]. They have voted. The first payment will be made in four months, if not he will be bankrupted."

The hearing will continue today, when the IRD will address the court. Associate Judge Jeremy Doogue is expected to reserve his decision.