PricewaterhouseCoopers has reached a confidential settlement with the liquidators of David Henderson's failed property development firm Property Ventures (PVL), ending its part in a lawsuit that was seeking $302 million in damages from the accounting firm and company directors.
The lawsuit, which was bankrolled by litigation funder LPF Group in return for 42.5 per cent of any settlement, had alleged that PWC and managing partner Maurice Noone advised PVL on ways to continue trading when by some accounts it was insolvent while at the same time giving the company a clean bill of health as auditor. PwC had denied the allegations.
"Both parties are pleased to see this matter resolved and as the terms of the settlement are confidential, we are unable to make any further comment at this time," they said in a statement.
PVL had been the largest asset of failed finance company Hanover Finance, amounting to more than 20 per cent of Hanover's assets, at the time the finance company's investors voted on a moratorium that led eventually to the sale of their debt of Allied Farmers. Shares of Allied Farmers were halted on the NZX this morning pending
In 2008, PWC was the auditor of both Property Ventures while it was also advising the trustee of Hanover over the moratorium, the lawsuit had alleged.
Liquidator Robert Walker had alleged that if not for PwC, the company PVL would have been wound up in 2007, allowing loans to be called in, asset sales and a more orderly liquidation. Instead, it continued until 2010, when it failed owing $69m and was later put into liquidation. Henderson was bankrupted that year and has since been discharged. From 2006 until its failure, PWC gave the company clean audits.
PwC was one of nine defendants in the suit, which continues against the others including former PVL chair Austin Forbes QC, with the substantive hearing set for early 2018.
"Our focus is now on the directors and the trial scheduled for February 2018; it is an important case for us," LPF said in a separate statement.
During preliminary hearings at the High Court in Christchurch, the total owed was put as high as $1 billion once penalty interest was included. Any distribution to creditors won't be made until the case is completed.
In a separate statement, Allied Farmers said it had no knowledge of the amount received or to be received by the liquidator as a result of the settlement and until the case was completed it wouldn't crystalise any payment obligation to Allied.