Creditors eye Hartners' family trusts

By ANNE GIBSON

Disgruntled creditors of insolvent Epsom couple Wayne and Gaile Hartner are going after the assets in their family trusts in an attempt to get their money back.

At a meeting in Auckland yesterday, the creditors decided further investigation of the Hartners' financial affairs was warranted.

The meeting was called for 60 creditors to vote on a proposal made by the Hartners under the Insolvency Act which would result in the creditors agreeing not to have the insolvent couple bankrupted in return for a part-payment.

If the couple are bankrupted, only 5c will be paid for every dollar owed to the creditors. But if creditors hold off bankruptcy proceedings, the couple have agreed to pay 43c for every dollar owed to creditors.

But at the closed meeting the creditors raised doubts about the scheme and the meeting was adjourned until June 29.

A three-strong creditors' committee was formed to further investigate the Hartners' assets, said provisional trustee and accountant Jeff Meltzer.

The committee will, in particular, investigate the assets of various family trusts. The creditors hope that more money could be recovered, or if that is impossible, confirm that the money being offered is fair and reasonable.

The Hartners' proposal details how they shunted about $4.6 million in related-party advances to various family trusts.

Various family trusts are declared as having a face value of $5.3 million. The GA & WF Hartner Trusts have a total face value of $3.3 million.

The creditors at yesterday's meeting were mainly those who supplied materials and labour on the Hartners' luxury mansion at 28 Golf Rd, Epsom, for which no current valuation has been given.

But not all creditors worked on the house. Tile Warehouse is owed money for tiles supplied for the Hilton Auckland, built by Hartner Construction. It is claiming $29,382 from Gaile Hartner.

For the Hartners' proposal to creditors to succeed, half the creditors owed 75 per cent of the money have to agree to its terms and conditions.

The 60 creditors are owed $765,728 mainly on the house. They include firms such as an aerial company which installed a highly sophisticated electronic system throughout the house to enable residents to talk to a visitor while sitting beside the swimming pool.

The proposal outlines how the Hartners have personal debts topping $30 million, mainly as a result of personal guarantees they gave to banks. Before yesterday's meeting, creditors were philosophical about the outcome.

Because Hartner Joinery was the single biggest creditor, claiming $111,000, they expected it would vote in favour of the scheme. This would help push it ahead.

But some were unhappy about the offer being a full and final settlement. If more money was realised from the Hartners, particularly from the sale of the house, they should be entitled to have the remaining 57c owed out of every dollar, they said.

Hartner Construction and Hartner Group went under earlier this year owing more than 1000 subcontractors and suppliers $28.5 million.

Hartner Construction is in receivership and liquidation.

Receiver John Waller, of PricewaterhouseCoopers, has repeatedly told creditors that even the first debenture holder, the National Bank, is unlikely to get its $8.5 million back. Unsecured creditors could, therefore, expect no payout.

Following the meeting, creditors said they were unhappy with the amount of information provided to them in the Hartners' proposal. They wanted the committee to investigate the Hartners' affairs and provide more information.

But the Hartners said this was the best deal they could put together.

They gave "unconditional assurances that the committee will have total access to all information, everything to do with the trusts and bank guarantees."