BNZ in court scrap over Fontein's drip-feed offer

Patrick Fontein says BNZ is attacking him. Photo / Paul Estcourt

An offer to repay creditors owed $93.9 million has been met with disdain from BNZ and sparked legal action against the Remuera businessman who tried to develop Orewa's Kensington Park and Taupo's Huka Falls Resort.

The bank says Patrick Fontein, 45, could only repay such tiny portions of his debts that it cannot agree to his attempts to appease it.

His companies have gone under and by his own admission owe $93.9 million, with personal guarantees on at least $120 million.

Fontein says he can earn $200,000-plus annually as a property consultant, of which about $100,000 will go to creditors. He says he needs the rest to live on.

Gone are Fontein's development properties, boat, hired and leased BMWs and $8 million house at 534 Remuera Rd sold under contract for $5.8 million, which was less than the mortgage. He lives in a rented Remuera house and wants creditors to agree to having repayments drip-fed.

But the bank blocked that so now both sides are preparing to mount their cases in a defended hearing on November 8 in the High Court at Auckland.

The Herald was granted exclusive access to the full file by Justice Doogue after Fontein demanded to put his side of the story, claiming BNZ had forced him into financial ruin.

BNZ head of external affairs Diane Maxwell refused to supply documents, saying its side would emerge in November. BNZ court documents say his debts are enormous, he mismanaged companies and has offered creditors such a small amount that the public interest and those of commercial morality would be served by his bankruptcy.

"As at January 29, 2009, Mr Fontein's liabilities under the personal guarantees granted by him to various creditors totalled over $120 million. Mr Fontein has himself accepted that he has no ability to pay his debts," BNZ says.

The developer was "fiscally irresponsible", Kensington Park's collapse was caused by his failure to fund infrastructure as it was built and to apply money according to loan agreements and it was not the global financial crisis which caused the downfall but his own actions, BNZ says.

Fontein says the BNZ is attacking him and has mounted a punitive campaign lobbying creditors, but the bank says this is an inappropriate and false allegation.

Fontein says he has no assets, bankruptcy will spell the end to his community work and his property consultancy with ASX-listed contractor Downer.

But the BNZ says Fontein failed to honour personal guarantees on $100 million. A repayment proposal would see creditors get just 0.5 cents in the dollar until he repays $500,000.

He had wreaked "enormous and widespread financial loss" and devastation on his creditors, his failure caused other businesses to fail, and it will present affidavits showing this at the hearing, BNZ says.

A statement of affairs shows Fontein owes $20.9 million to Fidelity Ltd, $10 million to Fidelity Finance, $9 million to Super Yield Fund and $4,418,978 to Southern Cross.

Other debts are to NZ Crane Hire, PlaceMakers, Plumbing World, BMW Financial Services, McEntee Hire Services, Fisher & Paykel, Fairfax Auckland Group, Radio Network and many others.

He claims the bank tightened loan conditions and said the crunch point was over a $29 million, 12-month loan which came up for renewal. He was unable to meet new, more stringent terms even though between 2007 and 2008 he personally injected $5.5 million into Orewa.

Despite promises of flexibility and him achieving $75 million housing pre-sales at Orewa, the bank issued a notice that the project was in default in August, 2008.

Fontein said creditors owed 96.1 per cent of the money supported his repayment scheme.