IRD ponders UCI Holdings' bankruptcy bid

Graeme Hart / File Photo.

The tax department is yet to decide if it will oppose a bid from Graeme Hart's auto parts business to have its US bankruptcy protection recognised here in New Zealand.

Hart's UCI Holdings earlier this month filed for bankruptcy protection in the US to restructure what became an unmanageable debt.

The protection, known as Chapter 11 bankruptcy, effectively lets the company reorganise its business while retaining control of the assets to prevent creditors from mounting legal action.

As at June 2 UCI owed Credit Suisse and Hart's Rank Group Finance Holdings US$69 million under a revolving credit arrangement, US$400 million to bondholders, NZ$5.2 million in related party debt, and NZ$7 million to the IRD.

It filed for bankruptcy after missing a US$17.3 million interest payment to bondholders in February, having exercised a 30-day grace period and convincing the majority of noteholders not to enforce a default.

Brian Whittman, who was appointed to restructure UCI under the bankruptcy filing, is seeking orders in New Zealand's High Court for the bankruptcy protection to be recognised here.

Whittman's lawyer David Friar told Justice Ailsa Duffy during a short hearing in Auckland this morning that the Rank companies did not oppose the application and a trustee for the bondholders was not taking a position on it.

Inland Revenue has yet to make up its mind and is waiting for more information before it will do so, Friar said.

Friar expected that the IRD would not oppose the orders being sought.

A hearing to decide the application is due take place on July 27

UCI's filing includes the company's US businesses - Airtex Products, ASX Industries and Champion Laboratories - but not Hart's Autoparts Holdings.

Hart, New Zealand's richest man, started building the auto parts business when he was most of the way through creating a much larger empire in the packaging sector, Reynolds Group Holdings, using junk bonds to fund both expansions when near-zero interest rates around the world left investors clamouring for real returns.