Court slams bankrupt property developer

Bankrupt Queenstown property developer Rod Nielsen, now living in Las Vegas, should have his business activities restricted, says the High Court. Photo / Mark Mitchell.

Queenstown developer Rod Nielsen's business practices should be restricted and he must bear responsibility for commercial irresponsibility, says the High Court.

After declaring him bankrupt over a $14.5 million debt owed to failed finance company Bridgecorp, Justice Paul Heath, in the High Court at Auckland, criticised Nielsen's "speculative" business attitude, The Dominion Post reported.

Nielsen, who now lives in Las Vegas, originally borrowed $7.5m from Bridgecorp in 2005 to fund the Lake Esplanade development in Queenstown, which was never completed.

Nielsen operated a speculative business in good financial times but did not make adequate provision to deal with any adverse financial conditions, Justice Heath said.

"Property developers cannot do business on the basis that the market will always be buoyant. Nielsen must take responsibility for being, at best, imprudent or, at worst, commercially irresponsible."

Bridgecorp secured a judgment against the developer in mid-2008 for $13.7m owing but Justice Heath felt Nielsen had "made no real efforts to settle".

Nielsen's behaviour suggested there was good reason for the Official Assignee to inquire into his behaviour, Justice Heath said.

"Restrictions on his business behaviour, triggered by bankruptcy, are desirable."

At the same time Nielsen's brother Greg, with whom he secured the Bridgecorp loan, was trying to bankrupt his brother over a $1.8m debt for the Queenstown development.

Bridgecorp went into receivership in July 2007 with 14,300 investors owed $460m. Investors are currently expected to get back about 10 cents in the dollar.

- NZPA