Liquidation a relief as debts mounted

Bruce Wood
Bruce Wood
Long-time Dunedin financial adviser Bruce Wood last week placed two companies associated with him and his family into voluntary liquidation. Business editor Dene Mackenzie talked to Mr Wood about the decision.

Bruce Wood says putting two family-owned companies into liquidation has been like lifting a huge weight off his shoulders.

Struggling with bad health and juggling three businesses became too much as the debts mounted up.

The turning point was a spell in hospital and being unable to work for about four weeks. At that time, Mr Wood realised that pressure from the Inland Revenue Department gave him no option but to place Bruce Wood Ltd and Natalie Wood Ltd into voluntary liquidation.

Bruce Wood Ltd owed the IRD $10,000 as a preferential creditor, $30,000 to secured creditors and $97,000 to unsecured creditors.

Natalie Wood Ltd owed $138,000 to preferential creditors, including $135,000 to the IRD, $57,000 to secured creditors and $53,000 to unsecured creditors.

Mr Wood acknowledged the debts were "significant" and he was working through a process to pay the secured creditors over the next two years.

"Ideally, I would like pay all creditors if I could, but I can only do my best."

He is now working in the risk management area through another company, Vision Financial Life Planning, almost back to where he started 30 years ago.

"I had to get up and get going again. It's not what happens but how you respond. My focus is always working with people, making a difference, and I believe I have done that."

There were lessons to learn from the experience, which Mr Wood said he would use in the future. The biggest lesson was for people not to run away from their problems and to communicate with their creditors.

Mr Wood and his daughter Natalie Wood bought a hair salon in George St in 2004 that showed good earnings and prospects. They both did due diligence on the business before the purchase.

Things went well for two years but as the hair stylist industry was so fluid, customer numbers dropped as stylists took their clients with them when they changed jobs.

"Things picked up for a while but dropped back again. I knew we had to do something."

The salon was put up for sale but when it did not sell it was decided to merge with another salon. As part of the deal, a staff member of the other salon took over the financial management of the Woods' salon.

While it looked good on paper, the reality was that things did not go well, he said.

It was easy to blame the recession but other companies were doing well during that time. Mr Wood had earlier sold his financial planning business to prop up the salon but a combination of ill health and pressure from the IRD made the decision of voluntary liquidation the prudent one to take.

"It was a relief to us all. It had been particularly stressful. I have no regrets about the salon but it was a financial disaster. The overheads got to us."

Mr Wood had taken on a licence for Leadership Management Australasia (LMA) in Dunedin, realising it would be a tough slog for three years to get established.

He believed he had set aside adequate cash reserves to fund the business during its growth phase. The business was showing good results before health problems started to slow him down, Mr Wood said.

In 2009, the LMA business was not generating enough cash to cover the overheads so Mr Wood returned to the insurance business, while keeping his commitments to LMA.

"I am committed to LMA to deliver the final courses. A lot of companies regarded training and development as discretionary spending during the recession, although I disagree."

The big advantage of his insurance and risk management work was that he could pace himself, Mr Wood said.

He made the calls and followed up with the visits.

The experience with his own liquidation meant he could pass on some of those lessons to his clients.

"We did all the right things, sought advice. But sometimes the best is not good enough."

- dene.mackenzie@odt.co.nz

 

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