Orders to wind up Secureland

Press, 26 July 1986, Page 6

Orders to wind up Secureland

After listening to submissions for three hours in the High Court yesterday, Mr Justice Heron made orders that Secureland Mortgage Investments, Ltd, and its nominee company be wound up. The Official Assignee was appointed the provisional liquidator. The grounds that Secureland Mortgage be wound up were that it was just and equitable in the public interest, and because the company was insolvent and could not pay its debts. In the original petition, which was brought by the Registrar of Companies, Mr K. F. P. McCormick, insolvency was not a ground, but it was added yesterday., The public gallery was packed with investors. Mr N. A. Till, who appeared for both Secureland companies, applied for an adjournment of the winding-up petitions, but did not oppose the wind-ing-up. For the Registrar of Companies, Mr G. K. Pankhurst said that his instructions were to oppose any adjournment, and he wanted the hearing of the winding-up petitions to proceed. An adjournment was also requested by Mr J. J. Brandts-Giesen, who appeared for McKay and Hill, a firm of solicitors, who said that the firm was an agent for a number of creditors who had replied to a circular setting out a proposal to salvage Secureland.

His Honour said that

there were real difficulties about the standing of the Napier firm, and ruled that it had no legal authority to proceed under section 205 for a meeting of creditors.Mr C. R. Johnstone appeared for two creditors who sought an adjournment, and Miss C. M. Risk, for three creditors who supported the winding-up petition. In his decision, Mr Justice Heron said that there was no real contest to the fact that Secureland was insolvent, and could not pay its debts. But for the two other applications, the winding-up petition could not be refused. Secureland was incorporated on August 19, 1985, with a paid-up capital of $lO,OOO. It sought investments at high-in-terest rates for contributory first mortgages, which were not to exceed 70 per cent of the registered value of the property. In spite of a relatively short history, it had obtained about $9 million in Investments, most of which was put out on mortgage, but $2 million was held frozen in a bank account. The nominee company acted as a trustee for the investors, and held the mortgages in its name. The application for the adjournment had been made on the ground that the scheme to be placed before creditors would be a quicker and less expensive way to return the money invested by depositors. In the scheme put for-

ward by Ruth Ann Hiddlestone, a shareholder and director of. Secureland, there was some departure from the strict entitlement of some investors. The Registrar of Companies said that the schemes were wrong in principle, because these were, in effect, a windingup procedure in a lessformal and controlled manner. Serious and difficult questions were to be resolved as to the ranking of Investors, payment of penalty interest and other legal matters. Some mortgages had resulted in a loss after sale, and others had realised sufficient to cover both, capital and interest. Miss Risk, who supported the winding-up petition, put it correctly when she said that investors were anxious to get their funds returned, but not at the price of proper procedure and inquiry. The misunderstandings emphasised the need for the formality and discipline for the winding-up sought by the Registrar of Companies. While he was conscious that investors might be concerned at what they could consider were bureaucratic delays, the Official Assignee could put a proposal to them under section 205 at a meeting of creditors. "The longest way round may be the shortest way home for persons who have invested in this company,” said Mr Justice Heron.