Path clear for Henderson's bankruptcy

David Henderson File photo

The High Court dismissal of Auckland property developer David Henderson's creditors proposal has cleared the path for Inland Revenue to bankrupt him.

Henderson, the Princes Wharf developer, has been fighting a bankruptcy application supported by the IRD, owed $3.7 million, and the Bank of Western Australia, owed about $33 million, in the High Court at Auckland for months.

High Court Associate Judge Jeremy Doogue dismissed Henderson's proposal to drip-feed $1.5 million, about 4c in the dollar, on a $105 million debt over three years.

The IRD voted against the proposal at a creditors' meeting on April 26 last year.

But Bank West was not served with the proposal and so did not vote on whether it should go before the court for approval.

Other claims by Bridgecorp, in liquidation, and Downer Construction, owed $5.3 million, were also not part of the proposal.

The IRD opposed the proposal because it claims the size of the payment, $1.5 million, is too small, there is no assurance of payment, it is in the public interest that Henderson be bankrupted and that Henderson is a risk to the "integrity" of the New Zealand tax system.

Judge Doogue said his "overall conclusion" was that had Bank West been served with the proposal and attended a creditors' meeting, it would have been able to "defeat" the proposal.

"The position is even more certain if one includes the Downer debt. This is therefore a case where the non-notification of those two creditors deprived them of the ability to defeat the proposal."

Judge Doogue said in his judgment delivered yesterday that it was a "matter of central importance to the [Insolvency] Act's scheme that the requisite majority be obtained to the creditors' meeting".

Henderson has settled his $28 million debt with Westpac through the sale of his stake in the Victoria Park redevelopment, a project he is still expected to be associated with whether he is bankrupted or not.