Directors of failed firms due in court

Mark Bryers. Photo / Dean Purcell

Directors of Capital + Merchant, Bridgecorp, Five Star Finance, Nathans Finance and Blue Chip are due before the courts in the next few weeks.

This morning Capital + Merchant directors face criminal charges laid against them by the Securities Commission for allegedly making untrue statements in a registered prospectus and investment statements.

The charges relate mainly to related party lending and loan management.

Directors Neal Nicholls, Owen Tallentire, Colin Ryan and Robert Sutherland, together with Wayne Douglas who was registered as a director in February 2007, face Securities Act charges and civil proceedings.

The commission alleges the company's offer documents and advertisements misled investors by misrepresenting investment risks, especially in relation to related party lending, insurance cover and liquidity.

The commission also alleges that Nicholls and Ryan knowingly misled the commission.

Most of the criminal charges the directors face carry a maximum penalty of five years imprisonment or fines of up to $300,000.

Capital + Merchant went into receivership in November 2007 owing about $167 million to about 7000 investors.

Bridgecorp directors were back in court last week for a continued deposition hearing. Bruce Davidson, Rod Petricevic, Rob Roest, Gary Urwin and Peter Steigrad face 10 Securities Act charges each for their roles in issuing a company prospectus.

Another day of hearings will be held next month to determine whether the directors will face a trial.

When the company collapsed in July 2007 it owed 14,500 debenture holders about $459 million.

The Ministry of Economic Development (MED) banned Petricevic and Roest from directing or managing a company for five years from May 29, 2009.

Blue Chip director Mark Bryers will be sentenced at the end of May on 31 criminal charges he pleaded guilty to earlier this year. MED stated it would not seek a jail term for his failure to attend a creditors' meeting.

When Blue Chip collapsed in February 2008, the company owed $80 million to more than 2000 investors.

The Companies Office laid criminal charges against Five Star Finance's directors Marcus MacDonald, Anthony Bowden and Nicholas Kirk in July 2008.

The directors will be in court at the end of April on charges relating to securities that were offered and allotted to members of the public without a registered prospectus, an investment statement or trustee appointed.

The directors will be liable to a fine not exceeding $300,000 if they are convicted on the charges.

MacDonald, Kirk and Bowden were banned from directing or managing companies in New Zealand for five years from April 8, 2009.

The Securities Commission also laid criminal charges and issued civil proceedings against Nathans Finance's directors John Hotchin, Donald Young, Kenneth Moses and Mervyn Doolan.

They will be in court at the beginning of May.

Nathans Finance went into receivership on August 20, 2007 owing about $174 million to about 7000 investors.

The commission has also filed civil proceedings against the Bridgecorp and Nathans Finance directors. These proceedings are on hold pending the outcome of the criminal hearing.