"It comes under the term of a major transaction involving a director because Daniel De Martin was a director at the time and it should have been recorded in the company records and we can't find any sign that it was."
The settlement included a $1.3 million cash lump sum, $8000 paid out over eight weeks, and the transferring of assets worth more than $73,000.
Two other payments for sections, the value of which remain unknown, brought the total value of the "Daniel De Martin Settlement" to $1,575,073.80, according to the Xero accounts.
Cain said while De Martin and Cancian did sign an agreement, no independent valuation was done on the company prior to the buyout.
He said the liquidators were concerned about the lack of supporting documents that you would normally see for a transaction like this.
"How do you know what your 50 per cent is worth if you don't get a valuation done? Well, these guys didn't," he said.
"We've got to ensure that it was a bona fide transaction and that it was a transaction at fair value and whether or not it meets the criteria of a transaction that is safe from being overturned by a liquidator."
When Bella Vista Homes went into liquidation in November last year, it left behind unfinished houses and millions of dollars in outstanding debts to creditors.
Then in early March this year, Tauranga City Council evacuated 21 Bella Vista Homes at The Lakes ahead of Cyclone Hola to avoid immediate danger after a geotechnical report found an unretained slope on the development site was at risk of failing.
Only three of those homes have since been cleared for reoccupation after further issues were found.
The Bay of Plenty Times Weekend has tried to contact De Martin.
Danny Cancian yesterday confirmed that no valuation was done before the buyout of Daniel De Martin.
When asked why that was, he told the Bay of Plenty Times Weekend: "Because it wouldn't have mattered what the valuation came out as, he wanted what he wanted and that was it. We didn't have a choice."
Cancian said he felt pressured to agree.
"It was just what he wanted and he was making it so hard for us to run the company. I didn't have a choice."
He said he wanted to give De Martin $300,000 or $400,000 "which was about the valuation of the company at the time".
"That was based on what was through Xero and what was in the accounts and stuff like that."
When asked about the liquidators' comments regarding the major transaction involving a director not being found in the company records, Cancian said: "It would have been in the company records because the agreement was put into the records as well."
He later added: "There will be the company resolutions on what happened, I would say. It was all done by the lawyers, so they did all the company resolutions and what went on as well."
In reaction to that, Cain said: "He may be right but we have yet to see anything and I am currently trying to contact Mr De Martin to discuss this issue but not having any luck in locating him."
Cancian agreed the buyout "severely harmed" operations of Bella Vista Homes and was one of the reasons for it going into liquidation.
The next liquidator's report is expected at the end of June.
Cain said that report would likely indicate that the liquidators would not be taking any action against the city council at this time although he could not rule it out down the line as their investigation progresses.
Meanwhile, in March, the Bay of Plenty Times Weekend revealed that Bella Vista Homes had also allegedly made a series of transactions of "a significant value" to other companies and entities connected to Cancian in the four months before it went into liquidation.
That is something else that the liquidators were still investigating closely, Cain said.
"There are a number of transactions that he has with related entities to himself. So we are looking at all of those as is normal in such cases."
Cancian said at the time of the report that there was no physical money transferred or paid out – "it was all just paper transactions".
He said money that was owed to him by Bella Vista Homes was simply paid instead to companies that he was connected to or owned to keep them afloat.
Cancian said the paper transactions were all done by his accountants at Matley.
Principal and owner of Matley chartered accountants David Waine confirmed this at the time and said what they did was standard accounting practice but there are different rules for liquidations.
"We offset amounts owed to and from companies to form a net position. Doing so meant that associated companies to Danny benefited over other creditors.
"The liquidator is looking at which transactions need to be reversed to get a clearer picture of what is owed by Danny's other companies."