Eric Watson's Cullen Group has been moved into liquidation by court order, meaning it might no longer fight a $112 million tax judgment against it.
The company was moved into the hands of KPMG liquidator Vivian Fatupaito earlier this week, by court appointment.
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The Inland Revenue Department had been pursuing the company'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."
Because the liquidation was court-appointed, Fatupaito has 25 days to issue her first report.