Ex-Orcon owner gets bankruptcy reprieve

Warren Hurst's liabilities total more than $3.5 million and his creditors include former Orcon chief executive Greg McAlister, above left. Photo / Richard Robinson

Judge agrees to put bankruptcy action on hold while creditors offered $343,000 deal.

One of the former owners of internet company Orcon who has debts of $3.57 million has avoided bankruptcy and will attempt to appease creditors with a $343,000 deal.

Vodafone, New Zealand's second biggest internet company and its biggest mobile firm, applied in June to have Warren John Hurst declared bankrupt.

Hurst is a director of the now-insolvent telco Vivid Networks and led a consortium of businesspeople who bought Orcon from state-owned Kordia last year.

Orcon has since been bought by CallPlus, which also runs Slingshot and holds the number three spot in the New Zealand internet market.

While Hurst admitted yesterday to being insolvent, he made an 11th-hour bid in the High Court at Auckland to put the bankruptcy action on hold while he puts a proposal to his creditors.

This proposal would see creditors paid $343,000, the court head yesterday.

Hurst's liabilities total more than $3.5 million and his creditors include former Orcon chief executive Greg McAlister, who was seated in the public gallery at the back of the court yesterday. Hurst's family home - valued at around $1.7 million - is held in a trust, the court heard.

Vodafone is owed around $310,000 and the company's lawyer, Allison Ferguson, argued against Hurst's application, saying it was made on the last working day before the parties were due in court.

"In my submission Mr Hurst has treated the process with some contempt," she told Associate Judge Jeremy Doogue.

Hurst's lawyer, Howard Thompson, said his client had creditors other than Vodafone who hadn't been heard from and submitted that their interests should be considered as well.

Associate Judge Doogue, in an oral decision yesterday afternoon, agreed to put the bankruptcy action on hold and said this was not a case where delay would adversely impact the size of the assets available to creditors.

He also said bankruptcy resulted in "significant stigmatisation" for a businessman's reputation and that there was no reason to believe Hurst was taking steps to remove assets from the reach of his creditors.

Vivid Networks, which Hurst directed, was put into liquidation by a court order in July and a first report from liquidator Simon Rogan last month said creditors were claiming about $850,000.

The IRD is claiming $239,000 in GST and PAYE as well as some $296,000 in penalties and interest from the firm, the report says. Trade creditors are claiming $315,000.