By FIONA ROTHERHAM
The statutory managers of failed organic fertiliser company Max Resources are awaiting the outcome of an Australian Securities and Investment Commission (AISC) investigation before deciding on any potential legal action.
The latest statutory managers' report says the company has a net deficit of $485,000 without taking into account a $3,375,000 claim by former employee Trevor Lunt.
The mining-turned-chicken-fertiliser company was placed into statutory management in August 1998 after its shares had been suspended due to AISC concerns it had been operating in a fraudulent and reckless manner.
Statutory managers John Waller and Richard Agnew, of PricewaterhouseCoopers, said there were still complex ongoing potential claims and counter-claims to be resolved. Potential legal action could be taken against former directors, management or the auditor, Tauranga-based Sinclair Woods.
"The options range from trying to have some form of restructuring, to liquidation. We could end up with a shell company with some cash; it just depends on what the commission says," Mr Waller said.
Given that the majority of Max's creditors are parties related to the company, no payment will be made to creditors until the commission investigation is completed.
Former New Zealand-based director Owen McShane, who blew the whistle on the company, said he and the other independent director, Tom Johnson, are still owed for expenses incurred seeking the appointment of a provisional liquidator through the courts.
In January, the New Zealand Securities Commission (NZSC) issued a report criticising a number of the company's transactions between 1996 and 1998.
In particular, it said two of Max's Australian directors, Peter Briggs and Jeff Verheggen, and two independent shareholders broke the law by not disclosing to the market their substantial shareholdings.
Mr Waller said that report had had no significant impact.
"At the end of the day, they came down with a report and nothing has emerged from that. The Australian one is the key one we're waiting for."
Max's organic fertiliser assets worldwide were sold in November last year for $1.3 million to Perth-based Governor Investments, now run by Mr Lunt.
His claim, now in the hands of the statutory managers' lawyers, includes $1.5 million for criminal defamation and $485,000 for wrongful dismissal.
Max still holds an interest in two listed Australian companies worth around $250,000. Once these are sold, the statutory managers estimate they will hold funds of around $2.2 million.
Creditors are owed $2.7 million.
A significant portion of these creditors' claims are from parties related to some of Max's directors, management, shareholders or employees.
The statutory managers have raised concerns with the AISC about the 1997 sale by Max of its 30 per cent shareholding in the Australian mining company Intrepid, since renamed Cobra Resources.
The NZSC also raised questions about misleading information given to shareholders about the profit generated from this sale.
Max is still owed $750,000 from two Hong Kong-based companies in relation to the sale.
Action hangs on inquiry
AdvertisementAdvertise with NZME.