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David Ian Henderson – his latest bankruptcy and FTG Trustee Services Ltd

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Dave Henderson [David Ian Henderson], twice-bankrupt Christchurch property developer, remains a bankrupt and yet he is listed on the Companies Office website as owning 100 shares (100%) in FTG Trustee Services Ltd, a company of which he is sole director, and which currently owns 16 companies (see list below).
Is it lawful for Mr Henderson to continue to own these shares while a bankrupt? Should not the Official Assignee (OA) secure them on behalf of creditors and sell them, given that Henderson had gross personal debts of about $165m and $86m after the sale of secured assets, at the time the High Court in Christchurch imposed bankruptcy for the second time on him on 29 November 2010? (He was bankrupted in 1996 for three years). Are these shares not vested in the OA from the commencement of Henderson’s bankruptcy? If not why not?
These questions can best be answered by first examining The Insolvency Act 2006  –

Section 7 – “bankrupt means a person who has been adjudicated bankrupt (see section 10).”

S. 10 states: (1) Adjudication occurs when a debtor is adjudicated bankrupt.

(2) A debtor is adjudicated bankrupt if either—

  • (a) a creditor of the debtor applies to the court for an order of adjudication, and the court makes the order; or
  • (b) the debtor files an application with the Assignee for adjudication.
  • (1) Bankruptcy affects the legal status of a person and has important consequences. These include—
S. 7 Nature of bankruptcy states:

o    (a) the bankrupt’s property vests in the Official Assignee:

o    (b) the bankrupt is limited in the business activities he or she can undertake:

o    (c) the Official Assignee may be entitled to recover assets that the bankrupt has transferred before bankruptcy.

S. 104 Property held in trust by bankrupt
  • Property held by the bankrupt in trust for another person does not vest in the Assignee.
S. 124(1) of The Insolvency Act 2006:
·         Assignee may transfer shares and other securities:
·         The Assignee may transfer the following property belonging to the bankrupt in the same way as the bankrupt could have transferred it if the bankrupt had not been adjudicated bankrupt. [see Appendix below for fuller statement]

It would appear that the OA must have already sought to secure the 100 shares owned by  Mr Henderson, only to be informed by his lawyer Mr Grant Smith LL.B., B.Com (Hons), co-Director of Canterbury Legal Services Ltd, that the OA is not entitled to them because his client holds all the shares in trust for another person or persons.S. 104 of the Insolvency Act 2006 (“the Act”), noted above, states: “Property held by the bankrupt in trust for another person does not vest in the Assignee.”

The name FTGTS would appear to suggest that the company is a custodial service (“trustee services”) with Henderson as trustee holding shares on behalf of other person(s).

A trust is the legal relationship created when a person (the “settlor” places assets under the control of a person (the “trustee”) for the benefit of some other person (the “beneficiaries”) or for a specified purpose.

The assets transferred to the trustees become their property, but they hold the assets on trust for the beneficiaries. The trustees are therefore the nominal owners of the property, but they have a legal obligation to deal with the property in the manner set out in the trust deed.

[Source: http://www.howtolaw.co.nz/understand-trusts-xidp392075.html]

FTG Trustee Services [“FTGTS”], in turn, is probably a trustee company operating a discretionary trust – whereby “the trust deed gives the trustees a discretion about matters such as who may be a beneficiary and what each beneficiary’s share will be”. (Its Constitution is available on the Companies Office website).

The position of trustee is an extremely important one, and trustees are in a “fiduciary” relationship with the trust’s beneficiaries. Because a bankrupt cannot own property, all of his property is vested in the AO from the commencement of his bankruptcy, until he is released from bankruptcy.

FTGTS has been owned and directed since it was incorporated on 19 August 2003 by Christchurch property developer David Ian Henderson, and up until the High Court in Christchurch imposed bankruptcy on him on 29 November 2013. From that point on, as s. 7 (1)(a) of the Insolvency Act 2006 states that the bankrupt’s property vests in the Official Assignee [“OA”].

FTG Trustee Services is listed on the Companies Office website as currently owning sixteen companies three of which are soon due to be struck off the register of companies. A further four of its companies are in liquidation. Of the 16 it currently owns, all but one have their registered offices and address for service as:

Canterbury Legal Services Ltd, 256 Memorial Avenue, Burnside, Christchurch, 8053, New Zealand [This is the company of which Henderson’s lawyer Mr Grant Smith is a co-director]

Odeon Property Holdings Ltd, owned by FTG Trustee Services, has a different office (see below). Prior to 26/11/12 Odeon Property Holdings used to be owned by Matador Trustee Services Ltd.

David Ian Henderson was last adjudged bankrupt on 29 November 2010, and remains a bankrupt, records his residential address as: Unit 58, The Heritage, 98 Worcester Street, Christchurch, 8011, New Zealand. As noted, he holds 100 shares (100%) in FTG Trustee Services Ltd which currently owns 16 companies. (Henderson is often referred to in the National Business Review as “Hendo” by regular columnist former ACT leader Rodney Hide, his most long-term ardent supporter and close friend).

Let us consider the current ‘state’ of these companies, bearing in mind that it is an offence under the Companies Act 1993 for a bankrupt company director such as Mr Henderson to be involved in any way in the directing, promoting or management of any company.

FTG TRUSTEE SERVICES LIMITED (“FTGTS”)

DIRECTOR KRISTINA LOUISE BUXTON

Of the 16 companies FTGTS owns, six are directed by Mr Henderson’s wife, Kristina Louise BUXTON, who records her residential address as: Rafters Road, Rd 8, Gibbston Highway, Gibbston Valley, Queenstown, 9371, New Zealand.

DIRECTOR IAN BRUCE HYNDMAN 

Registered Office

Taurus Group Limited, Level 1, 22 Foster Street, Christchurch, 8011 , New Zealand

Address for service

  • Last filed its Annual Return on 02/03/12
  •  Public notice has been given and the objection period has lapsed. The Registrar will continue with the removal process.

DIRECTOR JOHN EDWARD BUTLER

One company owned by FTG Trustee Services is directed by John Edward Butler who gives his residential address as: 6/55 Carlton Mill Road, Merivale, Christchurch, 8014, New Zealand. The company is

Four companies that were owned by FTG Trustee Services are now in liquidation:

COMPANIES IN LIQUIDATION

If Mr Henderson is released from bankruptcy by the Official Assignee, nothing changes in terms of his listed ownership of FTG Trustee Services Ltd, the owner of 16 companies. Once removed from bankruptcy Mr Henderson can be legally appointed to the directorship of any of these 16 companies and/or any other company.

Appendix 

Insolvency Act 2006

124. Assignee may transfer shares and other securities

  • (1) The Assignee may transfer the following property belonging to the bankrupt in the same way as the bankrupt could have transferred it if the bankrupt had not been adjudicated bankrupt:
    • (a) securities in a company:
    • (b) securities of the New Zealand Government:
    • (c) securities issued by a local authority:
    • (d) shares in ships:
    • (e) any other property transferable in the records of a company, office, or person.

(2) A person whose act or consent is necessary for the transfer of the property must, on the Assignee’s request, do whatever is necessary for the transfer to be completed.

(3) In the case of the transfer by the Assignee of securities in a company, a shareholder to whom the securities must be offered for sale under the constitution and who agrees to purchase must pay a reasonable price for the securities, whether or not the constitution provides a procedure for fixing the price.

Reference:

Property developer David Henderson placed in bankruptcy. By Martin Van Baynen. Published 29/11/10.

http://www.stuff.co.nz/business/money/4403232/Property-developer-David-Henderson-placed-in-bankruptcy

Recommended Reading

Equity and Trusts in New Zealand 2nd Edition. Edited by Andrew Butler (Thomson Reuters, 2009). This is the authoritative reference for lawyers, the judiciary and law students seeking to find and understand the law relating to equity and trusts in New Zealand. It is the only full length New Zealand text to bring together the law of trusts and the law of equity.

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