Court Report: life is full of compromises
Hamish McNicol searches for a compromise to a compromise which some say isn't even a compromise. With special feature audio.
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Hawke’s Bay
Callaghan Innovation has rejected a creditors’ compromise deal from Trends Publishing International, but the media company says the only reason it had to offer one is because of the government agency’s “fundamentally flawed” process.
The first of two court dates between the government agency and the company it demanded return a $400,000 grant began in the High Court at Auckland this week.
At issue was a 15c in the dollar creditors’ compromise Trends came up with in May last year, after it suffered a cash crisis which hit revenue by as much as 64%.
Overall, 39 of the 48 creditors voted in favour of the compromise, but five – including Callaghan – have gone to the courts seeking it be set aside.
This, they say, is because associated creditors accounted for more than $3.2 million of the $4.2 million debt, meaning just three creditors controlled 75% of the vote.
But they had also opted to stay out of any payment in the compromise, which would see $169,000 returned over nine months – a fact labelled “significant” by Callaghan’s lawyer, Seb Bisley.
“The compromise couldn’t have been passed without the favourable creditors.”
Trends, however, contends the associated creditors’ interests are “aligned” with the common interest of all creditors because it would see them receive more than if the company went into liquidation.
The company’s lawyer, Shan Langston, told Justice Paul Heath Callaghan’s “fundamentally flawed” process, including the mention of a Serious Fraud Office investigation in a press release, caused the compromise in the first place.
“This compromise is the best outcome for the creditors.”
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Thu, 14 Jul 2016
Thu, 14 Jul 2016
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Court Report: life is full of compromises
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