RSL hearing adjourned

Press, 7 October 1988, Page 12

RSL hearing adjourned

PA Auckland Hearing of petitions to wind up companies in the Registered Securities Group have been adjourned until October 17 for a scheme of arrangement with creditors to be put in place. A timetable put to the High Court in Auckland yesterday proposes a creditors’ meeting in the week starting December 5. An RSL director, Mr Christopher Boyle, flew to the United States on Wednesday evening to collect the loan that will form the basis of the embattled mortgage group’s scheme of arrangement with creditors. Mr Brian Henry, counsel for the five RSL companies facing winding-up petitions and their contributories, outlined the timetable for a scheme of arrangement before Mr Justice Tompkins in the High Court at Auckland. The judge agreed to adopt the timetable and adjourned hearing of the petitions until October 17. Mr Henry said a computer model of the proposed

scheme and an assessment of the mortgages involved was under way and should be completed by October 14. Because the provisional liquidator for four of the companies, Auckland Official Assignee, Mr Robert On Hing, was concerned about delays affecting some properties detrimentally — such as the de Surville Motor Inn, at Taipa, in Northland — he should apply to vary his powers at the next hearing, Mr Henry said. The draft scheme of arrangement should be filed with the High Court by October 21. "We would hope by November 4 to have a final scheme available for the court’s approval,” Mr Henry said. If the scheme goes ahead, creditors' meetings would be held around the country in the week starting Monday, December 5. A tremendous amount of work had to be done, but the timetable was not unrealistic, Mr Henry said. Both Mr Henry and Mr

Mark Woolford, counsel for Registrar of Companies, Mr Kevin McCormack, who is petitioning to wind up the group, criticised an article in Wednesday's “Dominion" for its possible effect on a return to investors.

Mr Woolford said the article "misrepresents the views of the Justice Department and puts them in a perspective which was not intended.” Mr Woolford and counsel for the RSL investors group, Mr Matthew Muir, said there was some scepticism about the American loan proposal. Mr Henry said the article referred by innuendo to large scale fraud.

The publicity was baseless but, although RSL director Mr Boyle had left to collect his American loan, the transaction could have been jeopardised, Mr Henry said. The judge rejected a request by Mr Muir for early evidence that the money was available and for a statement of Mr Boyle’s personal and company assets and liabilities

so the credibility of the scheme could be assessed. A complete scheme should be prepared rather than information provided in stages. Mr Justice Tompkins said. The RSL group crashed in July after intense public scrutiny. It had about $lOO million of some investors’ money placed on mortgages. About half the loans were in arrears. Four of the companies — Registered Securities, Ltd, RSL Bonds, Ltd, RSL Life Insurance, Ltd, and New Zealand Mortgage Guarantee Company, Ltd — were placed in provisional liquidation and petitions were filed to wind them up. Later a fifth petition was filed to wind up RSL Holdings, Ltd, which had been formed to co-ordinate group affairs. The scheme of arrangement, under section 205 of the Companies Act, is being prepared by Mr Henry and Mr Tony Frankham, of accountants Deloitte Haskins and Sells.