Inside Money: Liquidation looms for van Eyk, NZ sale imminent

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The sale of van Eyk Advice NZ should be concluded within days, according to the first report to creditors from the administrator of its Australian parent, Moore Stephens.

As first reported here, the Auckland-based Saturn Portfolio group is in line to buy the troubled advisory firm.

In the van Eyk Research creditors report dated October 13, Trent Hancock of Moore Stephens, says the sale of the NZ subsidiary is imminent.

"In relation to the New Zealand business, I have signed a term sheet with a party which I am hoping to contract within the next few days, subject to regulatory approval," the report says.

However, the final sale price is likely to be at a substantial discount to the $10 million van Eyk paid for the Perpetual NZ advisory business in 2013.

As the creditors report reveals, the NZ group lost about $2 million in the 12 months to June this year. The accounts also show van Eyk Advice NZ is carrying goodwill of almost $8 million.

At least one of the nine van Eyk NZ advisers listed on its still-active website has since defected to brokerage firm, Forsyth Barr.

The Moore Stephens report also confirms the administrator has entered negotiations with a preferred buyer, understood to be rival research house Lonsec, for the Australian parent firm, van Eyk Research.

"As both sales are yet to complete, any details of the transactions is commercially sensitive and it would not be in creditors' interests for me to disclose further information at this stage, as this may compromise the transactions," the Moore Stephens report says.

While Moore Stephens is still investigating the ultimate causes of the firm's implosion, the rapid slide into administration was triggered after Macquarie froze, and eventually terminated, the van Eyk Blueprint funds over which it acted as responsible entity (similar to trustee) this July.

The report includes a comment from van Eyk Research head and director, Mark Thomas, saying Macquarie based its decision to shutter Blueprint funds on "an illiquid fund that represented only 3.75 % of total assets".

"These were misappropriated by a fund manager against the instruction to a hedge fund named Torchlight run by a former [van Eyk] shareholder, George Kerr," Thomas says in the report.

Moore Stephens' Hancock says he has identified several related party transactions "involving share transactions, loan funds and investments that warrant further investigation".

"In particular, the relationships and transactions between the Company, the individual Blueprint Funds, Artefact [UK-based hedge fund manager], Torchlight, as well as the relationship between those funds and their respective managers and directors," Hancock says in the report.

According to Australian investment trade publication Investor Strategy News, further litigation involving several parties, including Thomas, is on the cards.

"When the definitive story is written, however, it will likely point to the major rift between Thomas and the company's founder, Stephen van Eyk, as the catalyst for the decline," the Investor Strategy News story says.

Moore Stephens has recommended liquidation for van Eyk, which will be decided at the second creditors' meeting, scheduled for Tuesday October 21.