Bankruptcy abused

Michael Knight. Photo / NZ Herald

A Hamilton man with a long list of dishonesty convictions has become one of a small group of people to be indefinitely bankrupted by the courts.

Barry Whitelaw was bankrupted for the fourth time in July 2005 and later jailed for 10 months for "blatantly and flagrantly" disregarding the rules.

Now a High Court judge has refused to discharge him from bankruptcy, ordering that the earliest he can reapply is September 2013.

Whitelaw's indifference to the law was such that he continued to invoice people even after pleading guilty to managing a business without the consent of the Official Assignee [OA] who manages a bankrupt's affairs.

Usually a person is discharged from bankruptcy after three years but, if there are objections, the court can discharge them with conditions, extend the bankruptcy period or refuse to grant a discharge order at all and specify the earliest date on which they can reapply.

Three thousand people were bankrupted in the 2009-10 year. There were only a couple of cases of bankrupts being refused a discharge.

Whitelaw was first bankrupted in 1979. The 53-year-old was subsequently bankrupted in 1986 and 2000.

When he was bankrupted again in 2005 he had not been discharged from the last time because of objections from the OA.

In 2005 Whitelaw said that the main cause of his bankruptcy was "gambling, speculation and extravagance in living". He also cited his lack of business skills.

He continued to trade as a builder while telling insolvency officers that he had no ongoing business and that his only income was a benefit and ACC payments.

He should have been discharged from his latest bankruptcy in 2008 but the OA objected again.

In December last year Whitelaw was jailed for 10 months for breaching the Insolvency Act.

The OA told the court it had received a number of complaints from members of the public who had dealt with Whitelaw.

"The common complaint was that he had failed to identify his status and had engaged in dishonest dealings which caused loss," Justice White said in his decision to refuse a discharge.

He noted that the judge who sentenced Whitelaw to jail said he had "blatantly and flagrantly" ignored the rules throughout his bankruptcy.

"You obtained all the benefits of the bankruptcy and incurred none of the responsibility of the obligations which are designed to assist your creditors."

Justice White said Whitelaw had misled insolvency officers deliberately from the outset, and had caused further loss to creditors.

He was habitually dishonest in his business dealings and was unlikely to change.

Whitelaw joins another Hamilton man in being refused a discharge from bankruptcy.

Fraudster Miles McKelvy was bankrupted in 2004 and will now not be able to reapply for discharge until 2012.

McKelvy was jailed for eight years in 2006 for his part in the $1.4 million Operation Allsorts mortgage fraud.

The OA told the court that McKelvy was the principal architect in the "calculated and clever" scheme.

He had 38 dishonesty convictions stretching back over 12 years and had also previously been bankrupted in 1995.

In refusing to discharge McKelvy, Justice Heath described his conduct as "predatory" and "primarily designed to relieve truly vulnerable members of society of what little assets they had".

"The appalling and amoral conduct in which Mr McKelvy engaged is, in itself, a good reason not to allow him to be discharged from bankruptcy at this stage."