By SIMON HENDERY
Controversial Auckland businessman Jihong Lu, a key backer of the failed initial Britomart development, has been judged bankrupt over a $2.5 million debt.
As a result Mr Lu has been forced to resign directorships he held with former Britomart developer Savoy Equities and other companies.
Mr Lu was adjudged bankrupt in the High Court at Auckland yesterday after an application by a Malaysian company.
Kuala Lumpur-based engineering firm MESB Berhad had secured a judgment against Mr Lu in June for $2.3 million plus costs and interest.
It took him to court when a deal to buy his shares in New Zealand telecommunications company SmarTel fell through after MESB had paid Mr Lu a $2 million deposit.
In court yesterday, a lawyer for Mr Lu, Peter Stansfield, said his client had more than $10 million in assets and could easily pay the debt.
But Master Thomas Kennedy-Grant, in adjudging Mr Lu bankrupt, said he was not convinced Mr Lu had the assets he claimed.
Master Kennedy-Grant said selling shares he held in a listed Hong Kong company, Savoy Concepts, was the only way Mr Lu could realistically settle with MESB, but he had not done so.
The master said the Savoy Concepts share price had halved in recent months and placing a large block of the stock on the market would depress the price further.
Earlier in court, Mr Stansfield said that as well as the Savoy Concept shares, worth $10 million, Mr Lu's assets included three Auckland properties worth $5 million, which had mortgages totalling $2.5 million.
MESB's lawyer, Paul Buetow, said Mr Lu had had ample opportunity to pay the money he owed.
His financial situation was "precarious," and this was confirmed by a recent fall in the value of the Savoy Concepts shares, Mr Buetow said.
Mr Lu did not return calls from the Business Herald yesterday.
This year's National Business Review rich list said he was worth at least $12 million but the paper noted "there has been considerable speculation over [his] actual and reputed wealth, in part because some of his assets are overseas."
Aside from the Britomart fiasco, many of Mr Lu's other business ventures have proved turbulent.
A company he was linked with, Roadsigns, was ordered to pay $500,000 to two employees judged to be unfairly dismissed.
SmarTel, which sells pre-paid calling cards and toll services, was itself in hot water last year after a sales promotion it was involved in ran foul of the Lotteries Commission.
Britomart backer bankrupt over $2.5m Malaysian debt
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