Livestock companies are off the hook and farmers are being hunted down in a new recall of insolvent transactions following the liquidation of a New Zealand live export company.
In a change of legal advice, the heat has come off the livestock companies while farmers have become the new target for repayment of millions of dollars being recalled by the liquidator of the failed Hamilton-based live export company Genetic Development (NZ) Exports Limited Partnership (GDEx).
GDEx was put into liquidation by the high Court in Hamilton on September 5, 2022, with directors blaming the company’s financial challenges on a failed shipment of cattle to China, known as the Ocean Ute shipment.
The livestock ship involved never came to New Zealand in early May 2022 to collect 12,000 head of cattle waiting on two pre-export isolation farms.
Total direct costs and losses for the failed shipment added up to more than $5m.
Initially all livestock companies involved with the Ocean Ute shipment received letters advising that transactions at the time of GDEx’s last live cattle consignment to China, prior to the company’s liquidation in September 2022, were insolvent.
The companies were advised that by way of Assignment of Proceeds, payments were insolvent transactions under the Companies Act 1993.
Accordingly, the livestock companies were directed to return the funds.
Whether individual farmers would be held responsible and liable to return payments had not been determined at that time.
Livestock agent companies spoken to by Farmers Weekly this week said they had responded through their lawyers but heard no more from the liquidator.
There is good reason for the silence.
Further investigation and a change of legal advice now has liquidator Malcolm Hollis trawling through the GDEx database to track down more than 100 farmers who received payment, deemed insolvent transactions, via the livestock agent companies.
“The advice we received initially was we need to write to the livestock agent companies and ask, ‘Please pay the money back’,” Hollis said.
“Now adjusted legal advice is we need to go directly to farmers because effectively the livestock companies paid the money on.”
Others in the supply chain – including trucking companies, quarantine businesses and all other services and goods industries – are also being investigated.
“It is a complex administrative and legal scenario and equates to several millions of dollars.
“We have a copy of all the GDEx software and we are working our way through the database, then we will write to all the farmers asking that they please pay the money back.”
Hollis could not put a timeframe around when farmers would receive a letter but said “the process is quite well advanced”.
So what happens if farmers don’t pay up?
“I have not thought about that, there is a lot of water to go under the bridge yet,” Hollis said.
“Unfortunately, it’s the legal process I have to follow to ask these farmers to repay in the millions of dollars.
“Any payment made six months prior to the liquidation [September 5, 2022] is automatically void unless they can prove to me otherwise.”
Hollis said he is not expecting farmers to rush to pay up.
“I don’t know how farmers will respond. In reality it’s not likely they are just going to pay up and it may be that they band together; it may be that I choose to take one as a test case.
“All I can do is follow the process the law provides me with, and it could take 18 months.”
Overall 160 farmers were involved in the May 2022 shipment. The exact number of livestock companies has not been disclosed.
About 47 farmers never received any payment for their cattle as they missed the cut to be part of the pre-arranged financial agreement with the selected agent companies.
Hollis said the purpose of the insolvent transaction focus is to determine equalisation between creditors.
“We have 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 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.”
In Focus Podcast: Full Show | 5 April
In this episode Bryan looks at some new research that highlights an opportunity for red meat exporters to tailor their products and marketing to the wellness sector. AgResearch senior scientist Carolina Realini says More than 90% percent of survey participants across the two countries indicated interest in purchasing red meat to improve their wellness status, while about 85% indicated their willingness to pay more for red meat for potential wellness benefits.
Federated Farmers meat and wool chair Toby Williams is giving up on sending his wool to auction and will contract it instead. He tells Bryan why he’s made this decision.
Senior reporter Richard Rennie is back from four weeks in Australia, where he visited four states to see how the farming sector there was dealing with the issues of greenhouse gas emissions and evolving genetic technologies. He talks to Bryan about his experience and what he learned.
