Wednesday, April 24, 2024

Liquidator wants GDEx millions back

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Agents baulk as live export fiasco takes an expensive turn.
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Transactions worth millions of dollars have been recalled by the liquidator of the failed Hamilton-based live export company Genetic Development (NZ) Exports Limited Partnership.

At this stage all livestock companies involved with the Ocean Ute shipment have received letters advising that transactions at the time of the last Genetic Development (NZ) Exports Limited Partnership (GDEx) live cattle consignment to China, prior to the company’s liquidation in September 2022, were insolvent.

Whether individual farmers will be held responsible and are also liable to return payments is yet to be determined.  

The companies have been advised that by way of Assignment of Proceeds, payments were insolvent transactions under the Companies Act 1993. 

Accordingly the livestock companies have been directed to return the funds.

For most this is a return payment in excess of $1 million.

One livestock company director said his company was instructed to repay the sum of the transaction, “but it’s in the hands of our lawyer”.

“The ship sailed, the funds went to stock firms and were distributed to farmers. 

“What company has a few million dollars sitting in the kitty to pay that back now and what farmer still has $200,000 sitting there?” the director said.   

Overall 160 farmers were involved in the May 2022 shipment. The number of livestock companies has not been disclosed.

PWC liquidator Malcolm Hollis told Farmers Weekly the purpose of the insolvent transaction focus is to determine equalisation between creditors.

Whether creditors were treated equally prior to liquidation is also under investigation.

“We have got the powers to go through and determine any element of unfairness with some [creditors] paid in full and others not paid at all.

“If some are aware they were getting paid in full and others not at all, therefore knowing how the process was happening indicates it’s not fair and equal, then it can be voidable.

“The liquidator can make void any payments if they are found to have happened out of due process.

“The issue we are looking to address is about a clear group of farmers and agents who managed to get protected and a group who did not get anything at all.” 

Hollis said the process is a relatively complex legal scenario and it’s in its early stages.

“At the moment we have written to just the livestock agents; farmers are still in question.

“It could be either agents, or farmers, or both responsible, so farmers who received payment may yet be responsible as it could come back to farmers who have been paid under a void transaction.”

Hollis would not disclose how many agent companies were involved or the value of the payment reclaim other than to confirm “it is in millions”.

“We need to get the factual scenario understood. We are continuing to work through the process with contractual livestock agents, the exporter and farmers.

“We have written to people, all who have invested with the final dealings of the Limited Partnership [GDEx]. 

“We are receiving legal responses from lawyers. They have responded with their defences, and we fully expect that.” 

The letter to agents says “the liquidators have examined the arrangements in place between the Limited Partnership, importer Guangxi Xiong Te Animal Husbandry Co Ltd, the financier Purcell Brothers SPV (Purcell Exports, Australia) and Allied Irish Bank (AIB) with regards to the letter of assignment in favour” of respective agents and farmer clients. 

Under those arrangements GDEx instructed Purcells to receive on its behalf the total sale of proceeds from the Ocean Ute shipment.

The letter explained that given Purcells acted solely as an agent and conduit of funds, the payments to agent companies was a transaction of GDEx for the purpose of the investigation.

The “letter of credit” applied to an arrangement brokered by Purcell Exports.

At the time the Ocean Ute sailed on May 27, 2022, director Patrick Purcell said when complications set in, he was asked to facilitate a financial solution so the shipment could go ahead. 

“We found a solution with an overseas bank (AIB).

“Our instruction was to pay 11 or 12 suppliers, the bigger contracts with agents and it was for about $8m and the letter of credit was for these suppliers only.

“That’s what we were instructed to do, we were instructed to issue payment to those suppliers and they got paid.” 

At least 47 individual farmers missed the cut.   

Hollis said there is no timeframe set to resolve the issue but “we are looking to make steps in the next month.”

“Depending on the speed of legal processes it could be ongoing for 12 to 18 months – that’s an open question, there’s no answer at this stage.”

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