The Court of Appeal has ruled a $250,000 payment made by Andrew Krukziener as part of a 2009 deal with Hanover Finance was an insolvent transaction designed to sidestep the implications if the former property developer was bankrupted, the Court of Appeal has found.
Justices Lyn Stevens, Forrest Miller and Robert Dobson dismissed an appeal by HF Residual Obligations, formerly Hanover Finance, seeking to overturn a High Court decision deeming the payment to be an insolvent transaction, meaning it could be cancelled by the Official Assignee in charge of the bankruptcy of Krukziener's property. The Dec. 17 judgment was published on the Justice Ministry's website this week.
"We are satisfied that the deed, rather than documenting a genuine commercial transaction, was a device entered into by Hanover in an attempt to circumvent the limitation on one creditor obtaining preference over others in the bankruptcy of Mr Krukziener," the judgment, given by Justice Stevens, said.
The payment was the first instalment of a settlement Krukziener reached with Hanover in a bid to stave off bankruptcy after the finance company had been granted a summary judgment against the property developer over loans totalling some $4.2 million.
The deal would have seen companies associated with Krukziener pay $700,000 to purchase the debts from Hanover, paying $250,000 up front, a further 25 monthly instalments of $10,000 and a final payment of $200,000.