Former politicians dodge civil suit as Blue Chip liquidator runs out of money

Friday 1st February 2013 1 Comment

Former National Party Cabinet Ministers John Luxton and Wyatt Creech have dodged a civil law suit after the liquidator for the failed property investment group Blue Chip couldn't find anyone to fund the litigation.

The liquidator's inability to fund the $40 million claim against Blue Chip's ex-directors, who include Bolger era Cabinet Ministers Creech and Luxton along with the firm's founder Mark Bryers, means they have had to give up on the litigation, Jeff Meltzer of Meltzer Mason Heath said in a statement.

The group was probed by the Serious Fraud Office, though the white-collar crime investigator decided there was insufficient evidence to pursue a prosecution, even if it operated in a "moral vacuum".

"It is lamentable that, in the case of assetless liquidations such as the Blue Chip Group, major litigation that could benefit creditors either has to be funded by commercial litigation funders or by the creditors themselves, or the liquidators," Meltzer said.

"The scale and complexity of the proceedings have proved too challenging for potential funders and we as liquidators can no longer continue to meet the costs of litigation."

The suit, on behalf of 800 Blue Chip investors, focused on the period after 2006, when the group sold apartments off development plans in Auckland's central business district. It alleged there were "inherent flaws" in the business model, which led to its collapse.

The liquidator spent about $155,000 on legal fees and filing the proceeding, according to reports lodged with the Companies Office.

Meltzer said creditors will be told about the next step in the liquidation as soon as possible.

Bryers escaped a prison sentence in 2010 when he pleaded guilty to 34 charges relating to the company's mismanagement and improper accounting, angering more than 2,000 investors owed some $84 million when he received a $33,750 fine and 75 hours' community work.

Since then, the Financial Markets Authority has said it may revisit what action it can take against Blue Chip after a Supreme Court ruling last year deemed the group was in breach of the Securities Act in its scheme to sell Auckland apartments.

(BusinessDesk)

BusinessDesk.co.nz

Comments from our readers

On 2 February 2013 at 11:00 am Ivan said:

As usual the crooks get away with ripping off people's savings. But that's ok, the cops say that NZ isn't a soft touch. Who are they trying to kid. It's a utopia for white collar crims and everyone knows it.