by Jenny Ruth
Justice David Collins of the High Court extended the freeze of NZF Group's assets until further orders of the court.
The receivers of NZF Group's former subsidiary, NZF Money, are claiming the then directors, who were the same for both parent and subsidiary, grossly undersold NZF Money's then subsidairy, NZF Homeloans, to the parent company in October 2010 for $1,000.
Receiver Brendon Gibson of KordaMentha is claiming NZF Homeloans received "not less than $3.03 million" as a result of its sale last year to Australian non-bank lender Resimac.
The receivers are claiming NZF Group holds the proceeds of that sale "as a constructive trustee for NZF Money."
NZF Group chief executive Mark Thornton gave evidence that "the transfer of the shares to the parent company was simply for the purpose of improving the marketability of the homeloans business to potential investors, thereby ensuring the long-term survival and profitability of the NZF Group of companies, including NZF Money."
Thornton also said the NZF Homeloans shares had negligible value by themselves and NZF Money could not have sold them except as part of a sale of NZF Group's home loans division.
Thornton's estimation of NZF Homeloans's value at the time it was sold to NZF Group was supported by a valuation report by Campbell MacPherson, the same corporate advisory firm which wrote the independent report on the Resimac transaction.
Justice Collins cited "a number of qualifications" in Campbell MacPherson's report and "significant issues .. about the reliability of the author's conclusion" raised by the receivers' lawyers.
The receivers' lawyers also argued if NZF Group were allowed to proceed with proposed investments in two planned new joint venture projects, a commercial vehicle securitisation program and "a substantial KiwiSaver investment group," there would be a risk of its assets being dissipated.
Given NZF Group's track record, allowing it to proceed would invite the court to prefer "hope over experience," the receivers' lawyers argued.
Justice Collins also expressed concern over the deterioration of NZF Group's financial position, the likelihood it will have to convert its capital notes to equity, the resignation of NZF's chief financial officer and investigations of the company's affairs by both the Serious Fraud Office and the Financial Markets Authority.
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