The Supreme Court will hear a dispute over whether Bob Jones’s real estate firm Robt Jones Holdings jumped the queue in the liquidation of failed Blue Chip company, Northern Crest Investments.
The real estate mogul’s primary investment vehicle has been battling to keep $752,000 it received from Northern Crest, and today was granted leave to for the Supreme Court to hear at least a portion of the case.
Justices Susan Glazebrook, Mark O’Regan and Ellen France agreed to hear one aspect of the dispute relating to about $263,000 of payments. The question is whether the payments were a loan or a redirection of licence fees.
“If the payments were a loan, it appears that the assets available to creditors of Northern Crest were not diminished and the general body of creditors were not disadvantaged, but that would not appear to be the case if the payments were a redirection of licence fees payable to Northern Crest,” the judges said.
In September, the Court of Appeal upheld a High Court ruling that the liquidator of Northern Crest could claw back the 2010 payments because they were made when the former Blue Chip entity was insolvent.
The litigation had its origins in the years leading up to Northern Crest’s 2011 liquidation when two related parties covered unpaid rents after Robt Jones Holdings stepped up demands when the firm fell behind its rental payments on a lease in Auckland’s Queen Street.
Northern Crest had been part of the Blue Chip group and licensed property investment services. It relocated to Australia, where it was listed on the ASX, after making its last payment to Robt Jones Holdings.
However, liquidators were appointed in 2011 when a former Blue Chip employee’s claim on the business was upheld, with associate judge Tony Christiansen deeming the firm was insolvent and that there were “significant reasons to expedite liquidation”.
The Blue Chip group of companies failed in 2008 owing $84 million to more than 2,000 investors. It became a pin-up for regulatory failures of the time after the Securities Commission said property investment schemes fell outside the law requiring an offer document.
The Supreme Court later rejected that view and ruled the investment scheme marketing between 2005 and 2007 required a prospectus. However, the Financial Markets Authority decided it wasn’t in the public interest to go further than reviewing the case as Blue Chip-funded developers had reached a settlement with investors.