Forestlands liquidation claim `some hope' for investors

A Dunedin investor among those fighting for a payout from the Forestlands group says a bid to place the companies in liquidation does not go far enough.

The Financial Markets Authority said in a statement yesterday it had applied to the High Court at Nelson to place the Forestlands companies numbered 2-20 into liquidation.

An initial hearing was scheduled for Thursday, but would be opposed by the companies' representative, it was confirmed yesterday.

The FMA's application covered 18 companies associated with specific forestry blocks, all part of the group headed by director Rowan Kearns, but not parent company Forestlands NZ Ltd or Forestlands Marketing.

Liquidation was sought because ``the FMA ... has no confidence in the director to manage the relevant interests appropriately'' between the various parties, the FMA said.

The FMA began investigating in March last year, following complaints from investors about the sudden sale of Forestlands' assets, and the Serious Fraud Office was later called in to examine ``some matters'' which have not been disclosed.

Both probes were continuing despite the liquidation proceedings, and more than 4000 investors - including hundreds in Otago and Southland - were still waiting for a promised payout formula to distribute $18million in sales proceeds.

Yesterday, Dunedin man Ewen McDonald, who invested about $16,000, said the bid to place the companies in liquidation offered ``some hope'' to shareholders, but did not go far enough.

Liquidation proceedings should include the group's parent company, and should have begun sooner, he believed.

``I, like many fellow `B' class shareholders, find it difficult to understand why it has taken nearly 18 months for this thing to progress to this level.

``Surely to goodness, if they suspect something untoward has been evident within the Forestlands group of companies, then they must have a good idea by now.''

Despite that, he was pleased to see ``there may be some clarity coming'' for shareholders, even if any payout was not what had been hoped.

``There is a distinct air of despondency from a few of the investors, some of whom have openly stated they don't expect to ever get paid out.''

But he remained concerned Inland Revenue was at the head of the queue, collecting taxes and penalty fees it was owed while other creditors waited.

A High Court ruling, also released yesterday, allowed 10 of the Forestlands companies to use proceeds from the earlier sale of assets to pay $1.64million in taxes and interest owed, to avoid $157,136 in penalty fees.

The sales proceeds had been placed in a trust account following the FMA's intervention, to be distributed once Mr Kearns' advisers devised the formula for distribution to shareholders.

That had not happened, despite suggestions from Mr Kearns last December it would be ready by the end of January.

Yesterday, Mr Kearns, in a statement through law firm Anthony Harper, said the liquidation application would be opposed.

He had already instructed advisory company KordaMentha to undertake work, including preparing a framework for distributions to shareholders, which would be ``no different to what a liquidator would assess''.

Costs incurred by KordaMentha were being covered by Mr Kearns, but risked being duplicated by the appointment of a liquidator, he said.

chris.morris@odt.co.nz

 

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