KEY POINTS:
Untangling the complex web of Blue Chip-related companies which are now in liquidation is such a huge task that the liquidator of the multimillion-dollar property investment business says it will take a long time to find out who owes what.
Most of the companies associated with Blue Chip's
New Zealand franchisee Diem Ltd went into liquidation yesterday, leaving the financial future of thousands of investors up in the air.
Three companies were already in liquidation but at least 15 more have now followed. Auckland insolvency specialist Jeff Meltzer said he had been appointed as liquidator for the Blue Chip-associated companies.
He said neither Diem Ltd nor Blue Chip Financial Solutions Ltd, its Australian-listed parent company, had gone into liquidation.
But Blue Chip Financial Solutions Ltd requested a trading halt yesterday pending an announcement today.
Meltzer said the task of liquidating the New Zealand firms was daunting, with so much money at stake and so many entities involved.
"We're still trying to understand what they are, who, where and what they are all about," Meltzer said.
The string of liquidations immediately superseded any statutory demands which desperate investors had filed against the companies, working with barrister Paul Dale and property investment adviser Olly Newland.
"Those demands will lapse automatically because the only thing the statutory demands could do is force a company into liquidation," Meltzer said.
Many of the companies took deposits from investors for Auckland inner-city high-rise apartment blocks. But in some cases, the buildings never rose out of the ground, interest payments on the deposits ceased weeks ago and investors were worried.
Dale represents investors who paid deposits of $100,000 to some of the companies.
This money was a large downpayment for an apartment and he said yesterday he was pleased about the liquidations because investors were desperate to know where their money was.
"But I'm not optimistic there will be a bank account with money in it," Dale said.
He represents investors who paid money to Kingsley Ltd, which he said had taken deposits to build a multi-level apartment block in St Martins Lane in Auckland.
He is also acting for investors in Lanark Ltd, which again received deposits for apartments not built in Auckland.
Blue Chip Financial Solutions Ltd shares were trading at A9c on the ASX before the trading halt.
Meanwhile, in New Zealand, Meltzer said the liquidation task was huge and the scope and expanse of the business remained unknown until full financial forensics were completed.
He had now formed a team of liquidators to take charge of the businesses in New Zealand, working with Arron Heath and Lloyd Hayward to ascertain what the companies did, what assets and liabilities they have and how much investors might get back.
Meltzer said Auckland businessmen Rikki Flowerday and Neil Bell were directors of the companies.
Both have refused to comment about the situation but Meltzer said he was relying on their expertise.
"The directors have an obligation to provide us with a statement of affairs to the best of their knowledge so there's a need to provide lists of assets and liabilities. They're working on that at the moment."
Meltzer asked that investors give his team time to complete the large task but said many creditors had already approached him.
"There's probably 30 so far and they're just phoning to make sure their names are on the list," he said.
He encouraged investors to take immediate action over rent payments.
"Individuals should be taking their own advice and dealing directly with the tenants and making sure the money is either going to Harcourts as property managers or to them as the landlord because we are unable to continue managing the properties," he said.
IN LIQUIDATION
Jeff Meltzer has been appointed liquidator to these Blue Chip associates:
* Bribanc Property Group Ltd
* ART Apartments LtdAuckland Residential Tenancies Ltd
* Art Apartments (2006) Ltd
* Art Properties Ltd
* Becroft Ltd
* Blue Chip Joint Ventures Ltd
* Blue Jay Holdings Ltd
* Bradshaw Ltd
* Denby Ltd
* Ilmister Ltd
* Kingsley Ltd
* Lanark Ltd
* LTS Ltd
* McKeffry Ltd
* Pendale Ltd
* Strowan Ltd
* The Landings Management Services Ltd
INVESTORS' SAVINGS ON THE LINE
Many investors who sank money into Blue Chip associates have their life savings on the line.
Martin Dunn, head of apartment real estate firm City Sales, said he knew of an elderly gentleman in Katikati who paid $560,000 for a leasehold two-bedroom apartment worth half that.
"He says he will end up in a tent," Dunn said.
Investors forced to sell properties will get far less than what they paid,he predicted.
The scale of Blue Chip's businesses is vast, with a network of companies established to sell investors apartments and residential properties around New Zealand.
Investors bought mainly new units or apartments, drawn by guaranteed rental flow and promises that Blue Chip associates would buy the places back at the end of three-and-a-half or four years.
The investors expected a stress-free time because Blue Chip's management business would take care of the tenants and get 10 per cent of the rent for their work.
More than 4000 clients bought nearly 2000 properties, investing hundreds of millions of dollars.
But many other investors have been left dangling, paying deposits for apartments which were never built.
Calls for unhappy investors to attend a meeting resulted in 149 people gathering at the end of January in Greenlane to discuss their issues. Barrister Paul Dale said the situationfor some would be so ghastly that they might simply have no idea what to do next.
Investors have now organised themselves into groups, based on where their properties are. In most cases, they have appointed one person to take charge.
Many also took charge of the rent, telling tenants that instead of paying money to a Blue Chip associate, they should pay the investor directly.
