Blue Chip 'lifeline' has a few hooks

Former Blue Chip boss Mark Bryers. Photo / Paul Estcourt

A financial lifeline will soon be thrown to Blue Chip investors, if a filing posted with the Australia Securities Exchange by the failed company's reincarnated business has substance.

Directors of Sydney-based Northern Crest Investments Ltd (formerly Blue Chip Financial Solutions) told the ASX in updated half year accounts to September 30, 2009 it is pressing ahead with a scheme for the benefit of former New Zealand clients of Blue Chip.

Chairman, Canberra accountant Marc Wilson, said the scheme was prepared "with a view to possibly providing relief for the financial plight of Blue Chip investors, whilst minimising any potential long-term financial impact on Northern Crest shareholders".

He said Northern Crest had no legal obligation to investors but the board had genuine concern that they had been left in difficult circumstances.

He also said the board had been frustrated in its attempts to progress and get approval for the scheme with delays caused by three failed attempts to wind up Northern Crest in New Zealand.

The ASX filing noted Northern Crest and its former boss Mark Bryers have been named as eighth and ninth defendants in a petition in the High Court at Auckland by a group of Blue Chip investors under the name of Phyllis Hudson owed $285,000.

Their action centres on preventing mortgagee sales by lenders for their Blue Chip properties.

Wilson gave no indication of a likely return for investors but said he was hopeful of outlining details to "affected individuals" by the middle of the year.

But if Bryers still has any influence to bear at Northern Crest (he said last year he would continue to act as a consultant to the company after quitting the board in May) then comments he made in Sydney a year ago about a potential scheme to raise money for Blue Chip investors will help only some investors.

He said Blue Chip investors who put money into the company that was never secured over property had a genuine grievance and he was intent on getting them their money back through a scheme. He estimated they were owed $20 million.

Northern Crest filed its 2008 and 2009 half-year accounts last month ahead of its bid to relist on ASX before the end of July.

They showed a $45,000 loss in the latest period compared to a $7.4 million loss in the previous corresponding period.

The company suspended trading on the ASX in February 2008 after it failed to pay listing fees.

If relisted it plans to migrate the company from New Zealand to Australia and raise A$4 million ($5.2 million) through a mostly underwritten rights issue so it can expand into financial services and leasing on both sides of the Tasman using software developed by Blue Chip.

But it faces hurdles, not least ongoing inquiries by the Australian Securities and Investments Commission and the ASX into the affairs of the company after the calamitous collapse of Blue Chip in New Zealand.

Sydney accountant Hall Chadwick has also tagged the accounts with a raft of shortcomings after doing a review as opposed to an audit of the latest filed accounts.

The first said it was not given sufficient information to be able to say whether Northern Crest had complied with Australia's Corporation Act, whether it reflected a true and fair view of the accounts or whether the accounts complied with financial reporting standards.

It said there was uncertainty about the business continuing as a going concern.

Northern Crest cited optimistically two licensing agreements and the underwritten rights issue as reasons to move forward in Australia and by trading in New Zealand with a company called Moorecroft Holdings.

But it also said it faced potential legal action over a $12 million debt obligation sought from it by Lombard Finance's liquidators relating to loans and guarantees.

The company said it had settled one judgment, for $288,000 with Robt Jones Investments over unpaid rent on Blue Chip's Queen St property but faces further costs this month.

Chips are down

* More than 2000 investors were left out of pocket after 22 Blue Chip-related companies owing more than $80 million were put into liquidation in 2008.

* In February co-founder Mark Bryers pleaded guilty to 34 charges laid by the Ministry of Economic Development.

* He is due in to be sentenced in the Auckland District Court in May.