KEY POINTS:
The Blue Chip saga is a tough one to comment on because so much is unknown about the state of the businesses involved - those in liquidation and those that are not.
But what we do know is that there are a lot of extremely worried investors who
are owed money they were promised in a slick sales pitch. We also know those investors aren't getting the information they want, and have a right to, from the companies involved.
The issues which have hit mainstream news headlines this week have been brewing for some time.
I first became aware of Blue Chip when one of this country's sharpest brokers called me with his concerns about what he was hearing around the market.
When I raised it with property editor Anne Gibson, she was already aware of the speculation about cashflow problems.
In fact, she has been writing about Blue Chip since 2004.
The issue being talked about last year was that Blue Chip faced a large shortfall in the amount of rent being taken relative to the amount of rent that it had promised to pay investors.
The inner-city apartment market has dropped off markedly in the past 12 months with property values and rents falling.
In October the Herald noted that some unhappy Blue Chip investors were turning to property investment specialist Olly Newland for help.
Later that month when one unfortunate Blue Chip salesman rang Business Herald investment columnist Diana Clement, we ran a blow-by-blow account of the sales pitch and some cautionary analysis of the investment proposition.
In fact, in the past six months Blue Chip salespeople have managed to cold-call Anne Gibson twice, and senior Herald columnist Fran O'Sullivan and economics editor Brian Fallow. Needless to say none of them signed up.
In December, reporter Adam Bennett ran the first story of an investor upset by the lack of rent payment. The investor asked to remain nameless because he still hoped to resolve the situation. But he was at his wits' end and wanted the public to know there were issues.
Blue Chip's response was to claim this was an isolated case. But more cases of unpaid rent emerged.
By early January angry investors, such as Greta Norman, were publicly demanding action.
Blue Chip founder Mark Bryers went on the front foot. Appearing on TV, he accepted there were some technical issues but these would be resolved by the end of the month.
But on January 26, in a long Business Herald interview, he admitted that those deadlines would not be met.
He was still confident there was a technical issue that could be resolved, but conceded it was serious.
Bryers said he regretted the difficulties which he attributed partly to the company's fast growth.
"This is a human error issue of some magnitude," he said, referring to problems with how the data was entered into computer systems for clients when Blue Chip rearranged its business late last year.
He pleaded for more patience from investors. "People have to put this in perspective. In seven-and-a-half years, you've got a five-week gap with rent not being paid and suddenly everyone wants to jump on Blue Chip as a finance company and another Bridgecorp which is going to have a momentous collapse in New Zealand."
However, as that "five-and-a-half week gap" became a seven-week gap one group of investors decided they had had enough.
The situation was brought to a head on February 7 when lawyer Paul Dale, acting on behalf of a group of investors from Tokoroa, filed statutory demands against some of the related companies demanding payment of $314,000. That set a 15-day deadline for payment or the companies faced being liquidated.
That deadline was rendered redundant this week when it was revealed that 19 Blue Chip-related companies were in liquidation.
Investors must wait and hope for news from liquidator Jeff Meltzer. It will be a difficult and stressful time.
Liam Dann is business editor of the Herald.
