'Unreliable accounting' halted debt recovery

Sam Kelt's Keltern Stud's final liquidator's report has been released. Photo / File

Keltern Stud's final liquidator's report says unreliable accounting information prevented the recovery of debts and the liquidator was obligated to pay for the welfare of remaining horses.

The company was put into liquidation in 2013 after court action by merchant banker Sam Kelt's sister, Susan Foote, and her husband, Stuart, who sought to recover a $313,000 inheritance as trustees of the Foote Family Trust.

She said her father, Gordon, made the loan to the stud, which he ran with Sam Kelt.

Director Sam Kelt claimed the money was a shareholding in the company but, when declaring the company in liquidation, Judge Gendall said it was a loan. Incorporated in 1986, the horse breeding business was a major force in the Hawke's Bay horse racing industry.

In his final report, liquidator Kevin Russell said the company operated within a group of inter-related company entities known as the Kelt Group.

Keltern Stud was wound down two years previous to the liquidation and the only physical assets remaining were several horses.

"Due to the condition of the horses and the lack of feed available to the horses, it was necessary for the liquidator to to incur costs for the welfare of the animals," the report said.

"The horses were found to be of no significant value and the liquidator was fortunate enough to rehouse the horses at no cost to the liquidation."

Debtors were all Kelt Group companies. "All the book debts were disputed on the grounds that the financial records relied upon had been corrupted beyond the point of being accurate and reliable."

The debts were not recoverable due to the unreliability of the accounting information available.

The stud's 37ha property in Roy's Hill, on SH50, was sold in 2012 for $1.35 million, 10 times more than its purchase price.