A Queen St forex broker whose business collapsed leaving clients - mostly used-car importers - owed $13m, is mulling bankruptcy after being served with a $4m claim by liquidators.
The latest liquidators report for Forex Brokers, prepared by Christopher McCullagh and Stephen Lawrence of PKF, claimed the company's sole director Russell Maher had breached his duties under the Company Act by continuing to trade for four years while incurring "significant losses".
Liquidators said this meant they considered Maher was personally liable for some debts of the company and had served him a demand for $4m, but recovery was unlikely.
"Maher responded advising that he did not have the means to settle the demand and therefore intended to declare himself as bankrupt shortly."
Such a move would likely forestall any recovery action, and liquidators gave Maher a deadline of November 30 to bankrupt himself or proceedings would begin.
Maher, Forex Brokers' managing director, had earlier told liquidators he blamed the failure on "too many 'out of money' contracts," and competition that forced him to adopt an overly-large position.
"I had tried to devise a plan to start returning investor funds and start scaling back the company until I could close it down, but I ran out of time and cash flow," Maher said.
The website for Forex Brokers, founded in 1995, claimed Maher had "over 20 years experience in the foreign currency industry" and "an extremely high level of business integrity and customer service".
Several of the company's clients have told the Herald payment delays with the company seemed to accelerate from late 2016, and Maher had also offered high-risk foreign exchange investment services.
In March, the company's website went offline, it's doors were shut and phones began to ring unanswered. McCullagh and Lawrence were appointed in April.
Shortly after the collapse, when the scale of creditors became apparent and liquidators flagged discrepancies with the company's accounts, the Serious Fraud Office announced it was opening an investigating.
The liquidators' report notes this SFO investigation is continuing.
The liquidators report also provides a conclusion to a dispute over hundreds of thousands of dollars worth of gold and silver bullion found locked in the company's office safe in the Dingwall Building.
A third party, who had a key for the safe, had claimed ownership of the stash of precious metals, but liquidators were unconvinced and proceedings began at the High Court to determine to whom should go the spoils.
"After obtaining legal advice from a Queens Council and extensive negotiations, the liquidators settled the proceedings in September 2018. The liquidators received $260,771 in full and final settlement, and the bullion was handed over to the third party."
The liquidators report said 96 unsecured creditors had submitted claims saying they were owed $12,834,505, but the state of the company's finances meant they "do not anticipate there will be sufficient funds to make a distribution of significant value to unsecured creditors."