Liquidators paid record sum for Blue Chip inquiry

The largest amount believed to have ever been awarded by a special Ministry of Economic Development fund has gone to the liquidators of the Blue Chip group as they investigate what happened to investors' money.

In the past 12 months the Liquidation Surplus Account paid Jeff Meltzer and Arron Heath of Meltzer Mason Heath $162,875 towards the cost of expert and legal advice, as they look for ways to recover funds for Blue Chip victims.

The only other amount paid out in the year from the $1.8 million fund was $18,771 to the liquidators of finance company Five Star Finance and the related Five Star Debenture Nominees.

The Liquidation Surplus Account is set up under the Companies Act and is made up of funds left over from liquidations which for one reason or another have never been claimed. It is administered by the Public Trust.

Jeff Meltzer said it could be used only for very specific purposes and could not go towards general liquidation costs.

He said that thanks to the funding the Blue Chip liquidators were now two to three weeks away from deciding what action to take.

He did not want to go public with what that might be. "But what I can say is LSA will not part with funds easily.

"I'm confident that we stand a very good chance of getting some recovery for investors."

He said the large chunk of LSA funding had come to Blue Chip because the Government had decided it was not appropriate to put the group into statutory management, a decision he agreed with.

When Blue Chip collapsed in February last year owing at least $80 million to 2000 investors, the Government was criticised for not calling in the statutory managers.

Meltzer himself has also been criticised for not doing enough.

"I've got to wear that because I'm not prepared to come out half-pie and say we're doing things and we're going to take action. We're not building anyone's hopes up but we're quietly working away at what we believe is going to be a result."

He said Meltzer Mason Heath had carried the general liquidation costs to date. The LSA funding also covered only about half of the investigation costs, and the liquidators' lawyers were continuing to offer their services without being paid.

The liquidators had worked closely with the Companies Office, which has brought about 60 charges against Blue Chip founder Mark Bryers.

They met with the office before making the LSA application to decide which courses of action they would take, Meltzer said.

Joint liquidator of the Five Star companies, Gerry Rea of Gerry Rea Partners, confirmed LSA assistance was difficult to get. "We have applied on past occasions too and been turned down."

The funding the Five Star liquidators had received was being used to investigate action against the directors of the companies.

The group collapsed in 2007 owing $90 million.

SPECIAL FUND

Amounts handed out by the Ministry of Economic Development's Liquidation Surplus Account in the past year:

* $162,875 to the Blue Chip liquidators for investigations into how to recover funds.
* $18,771 to the liquidators of finance company Five Star Finance and a related company to investigate action against the directors.