Former Feltex chairman Tim Saunders announcing the company's receivership in September 2006. Photo/Chris Skelton
Former Feltex chairman Tim Saunders announcing the company's receivership in September 2006. Photo/Chris Skelton
KEY POINTS:
The Registrar of Companies has laid criminal charges against five former directors of failed Feltex Carpets.
The charges relate to information provided in the company's interim financial statements for the six-month period ended December 31, 2005.
"In these statements, Feltex Carpet Ltd failed to disclose a breach ofits banking covenants, and did not properly classify its debt," said Registrar of Companies' national enforcement unit manager Shane Keohane.
Those facing charges are John Michael Feeney, John Carlaw Hagen, Peter David Hunter, Timothy Ernest Saunders, and Peter Thomas.
The defendants appeared in the Auckland District Court today and entered pleas of not guilty, the Registrar of Companies said.
The matter was remanded to April 7 for a status hearing.
If convicted, each director is liable to a fine not exceeding $100,000.
A statement from the former directors today said they were confident they would successfully defend the charges.
They believed they acted appropriately by relying on the professional advice they received, they said.
"We do not believe there is any proper basis for the decision to bring these charges, and we will vigorously defend them."
Feltex Carpets went into receivership in September 2006 and subsequently into liquidation in December 2006.
When Feltex was floated in 2004, more than $250 million was raised from mostly New Zealand investors.
Following an inquiry by the Securities Commission into the initial Feltex share float and the company's compliance with financial reporting standards, the matter was referred to the Registrar of Companies' national enforcement unit for further investigation.
The Registrar said each of the directors was charged with two offences under the Financial Reporting Act 1993, relating to Feltex's interim financial statements for the six-month period ended December 31, 2005.
The first offence related to the failure to disclose the breach of a loan agreement - the ANZ Bank debt facility - that had not been remedied on or before the balance sheet date, the Registrar said.
The second offence concerned the classification of the ANZ Bank debt facility as "non current", whereas it should have been classified as "current".
