David Ian Henderson: Probe into collapse of Hendo’s failed Property Ventures Ltd

Property Ventures Ltd (PVL) was a development and investment company founded by Dolf de Roos and led by Christchurch-based property developer Dave Henderson. David Ian Henderson was adjudicated as a bankrupt in the Christchurch High Court on 29 November 2010 and remains a bankrupt under that order. He was to have appeared before the Christchurch High Court on 9 June 2014 for public examination of his activities whilst a bankrupt, but that “has been put on hold after the Christchurch businessman refused to hand over documents he was asked to surrender. A judge ruled that emails between Henderson and several of his business associates had to be provided to investigators so they could be considered at a three-day High Court hearing, scheduled to begin on June 9.” (The Press 29/05/14).

PVL was placed into receivership on 5 March 2010 owing $69 million and then placed into liquidation on 27 July 2010. One of its many subsidiaries – Park Trustee Company Ltd – was put into liquidation on 19 June 2012.

In May 2005 PVL attempted to raise $52.5 million from the New Zealand public with an offer of $1.75 convertible notes, without much success. Those few who did subscribe were subject to a trust arrangement with Covenant Trustee Company Limited. PVL then went further afield seeking to woo overseas investors to this offer, this time listing a PVL subsidiary – Park Trustee Company – as trustee on its investment statements.

A subsequent probe into the activities of PVL commenced by the Securities Commission in 2007 following complaints from overseas investors over non-payment of interest, raised alarms over the role of the related party trustee – Park Trustee Company  – in its apparent failure to protect overseas investors. The Commission expressed concern that the PVL investment statements may have been misleading – a potential criminal breach of the Securities Act, which does cover some aspects of overseas issues.

The trust deed that bound the trustee (Covenant Trustee Company) to protect NZ investors, allowed for PVL to withhold interest payments to investors if doing so would make it (PVL) insolvent or breach other debt covenants, but non-payment would not count as a default. With such dubious terms, it is not surprising that few New Zealanders chose to invest in PVL.

Park Trustee Company Ltd [PTCL) was incorporated on 20 October 2004 under the name “Property Ventures Trustee Company Ltd” (PVTCL) with its sole shareholder being Property Ventures Ltd [PVL]). Dave Henderson, who was a director of PVL at this time (he was appointed on 6/11/02), was appointed sole founding director of PVTCL on 20 October 2004 and he was soon replaced by sole director John Edward Butler just 13 days later on 2 November 2004. On the next day, 3 November 2004, Austin John Forbes was appointed as a second director of PVTCL (record filed 4/11/04).

The Consent and Certificate of Director (Henderson) for the Company (PVTCL) at incorporation was Completed by “J Butler” [John Edward Butler], Postal address – PO Box 1066 Christchurch and filed on 20/10/04.

The Consent of PVTCL’s Shareholder – “ Property  Ventures Limited (PVL)” – was signed for (no name provided) and simply recorded as “Completed by PO Box 1066 – Postal address Christchurch” – the same one as used by J Butler (see above).  PVL’s “Residential address” was given as “Level 17, Forsyth Barr Building, 764 Colombo Street, Christchurch” (its registered office at that time).

At the time of the incorporation of PVTCL (20/10/04), Austin John Forbes was one of PVL’s five directors, along with Henderson. (The PVL 2004 Annual Return filed on 11/06/04 records the company having four directors  – D Roos, Henderson, Johnston and Hansen). However, Forbes was appointed director of PVL on 19/10/04, just the day before the incorporation of PVTCL, and the document authorising that appointment was filed by John Edward Butler on 20/10/04.

Forbes was destined to become director of PVTCL – a subsidiary of PVL – just  15 days later on 3/11/04, the day after Henderson resigned as director of PTL.

On 2 February 2005 PTCL changed its name to Park Trustee Company Ltd (PTCL).  Soon after it became the trustee for PVL with respect to its overseas investment offers noted above. Why the name change just prior to the issuing of investment prospectuses? One could surmise that it was done to create the illusion to investors that an independent trustee was acting for PVL, when in reality it was just a related (subsidiary) company!  Park Trustee Company was originally called Property Ventures Trustee Company Ltd and the latter, if it that name had been retained on investment documents, it would have raised alarm bells in the minds of any potential investors.

On June 30, 2008, convertible note holders in PVL were left to convert their notes into worthless equity of Property Ventures, weeks after the company had admitted serious financial problems to Company Office investigators. (The main terms of the investment were that notes would pay 9 per cent interest for three years and convert at a rate of one for one into PVL  shares on 30/06/08, which would supposedly be worth at least $1.75 each by then).

Records show that 18.6 million PVL shares were issued on July 1, 2008, representing a supposed value of $32.5 m. Most of that came from investors in a related entity Gardez Investments Ltd (struck off the register on 6/09/07) after being amalgamated with Five Mile Holdings Limited) whose five directors at the time included David Ian Henderson and John Edward Butler. (Five Mile Holdings Ltd,  incorporated on 18 June 2003 and formerly called Frankton Ventures Ltd until  19 Feb 2004, went into receivership from 9/07/08 and liquidation from 9/02/12. Henderson its listed director was appointed on 10 March 2004),

Adding to this $18.6m loss by PVL investors to the $69m PVL owed to Hanover Finance and South Canterbury Finance. Money that vanished when PVL collapsed, the total loss to investors is more than $100m.

When the investigation into the collapse of PVL by the Securities Commission reached an impasse due to the failure of its directors to supply documents requested, the Commission asked the Registrar of Companies, Neville Harris on 5 May 2008 to carry out the inspection of PVL.

The Registrar excused himself from the task citing a conflict of interest according to a recent published investigation into his actions. According to Tim Hunter, Fairfax Business bureau deputy editor (see ref. 1), no explanation has so far been provided by the Companies Office, as to the nature of this intriguing conflict of interests.

References

1.  Securities Commission’s silence far from golden

The Dominion Post. Wednesday 21 May 2014. B7.

http://www.stuff.co.nz/business/opinion-analysis/10065328/Securities-Commissions-silence-far-from-golden

See also: Companies Office website www.companies.govt.nz

Note: