Bankruptcy looms for Eric Watson

Eric Watson is the founder and executive chairman of international private investment company Cullen Investments, now in liquidation owing tens of millions after a string of court defeats. Photo / NZME

Liquidators sifting through the crumbled wreckage of Eric Watson’s business empire have instructed lawyers to begin bankruptcy proceedings.

Watson, formerly New Zealand’s most famous businessman, has suffered a series of catastrophic setbacks in recent years - major court defeats against the New Zealand taxman, wrangles with his former business partner Sir Own Glenn and a live complaint of insider trading from the Securities and Exchange Commission in the United States.

It was the tax dispute - crystalised in 2019 in the High Court that ruled Watson’s Cullen Group owed $112 million in back taxes - that triggered the appointment of liquidators KPMG in December of that year first to the Cullen Group, then to a further 20 connected companies.

The eighth report by KPMG into their administration of group notes entities span New Zealand, the United Kingdom, the US and the British Virgin Islands.

In February, liquidators applied in the High Court at Auckland for, and were granted with no opposition, summary judgement against Watson personally after identifying transfers worth $60m from Cullen Investments to the businessman.

“Accordingly, the liquidators have instructed their solicitors to initiate bankruptcy proceedings,” the report states.

The next step for liquidators, having already successfully proven an outstanding debt through the summary judgement application, is to serve Watson with a bankruptcy notice requiring the debt to be settled within 10 working days. If the sum remained outstanding, liquidators could apply to the High Court to have him declared bankrupt.

Questions to KPMG about the status of this action were not immediately answered.

The liquidator’s report says the group owes more than $800m - although notes say creditors’ claims included related parties and liquidators have yet to assess their validity - and recoveries over the past four years have amounted to less than $400,000.