Flat Rock Collapse Flattens Creditors
Flat Rock Collapse Flattens Creditors
If man were immortal he could be perfectly sure of seeing the day when everything in which he had trusted should
betray his trust,
- Charles Sanders Peirce
by Anthony Davies
Reveivers of the collapsed Flat Rock Forests Trusts, Auckland Auckland accountants Jane Muir and Peter Cregten, have sold the trust's assets for $7.4 million to British buyers - enough to pay secured creditor Countrywide Bank and the receivers' fees, but not other creditors or the trust's investors.
While the final accounts should soon be signed off and the sale proceeds distributed, the story may be about to take a further turn. Rod Templeton, corporate trust manager with Perpetual, the trust's trustee, confirmed reports that the Serious Fraud Office is looking into some of the trust's pre-receivership transactions.
Perpetual is among the out-of-pocket creditors. It has not been paid its trustee fee since last March. Perpetual will write off those fees together with $250,000 incurred since then. Perpetual's losses are still mounting. Templeton says he is collating a list of creditors for the trust's final set of accounts - work which the trust's manager, New Zealand Trade and Investment (NZTIL) should be doing. NZTIL is itself about to go into receivership.
The trust started to run into trouble early last year when forestry asset values began falling, blowing out its debt/equity ratios. According to the trust's last set of publicly available accounts, at 31 March 1997 it had assets - principally 12 small forests - valued at $14.9 million and liabilities of $6.9 million, giving it a 46.3% debt/asset ratio, against the trust deed's 35% limit.
With asset values continuing to fall and deferred harvesting slashing the trust's cashflow, by late last year interest on the outstanding loans was accruing more quickly than the trees were increasing in value. Consequently, early this year Countrywide called in the receivers (see The Independent 4 and 18 February). It will shortly get its money back.
Source: The Independent Personal Finance and Investment section 11 November 1998
First, I believe the receiver was named John Cregten. Bear in mind that the last set of publicly available accounts were NEVER audited.
Second, Perpetual Trust is described as being "out-of-pocket", which makes them sound like one of the victims. Possibly they were, but that fact has been far from demonstrated.
Third, final accounts were never "signed off on" as far as unitholders are aware.
Fourth, the trust ran into "trouble" even earlier than 1997.
Fifth, the "publicly available" accounts referenced above were never audited. They should not have been quoted without this information being revealed.
Sixth, the liquidators incurred almost $600,000 in expenses for selling off forestry assets. Unitholders were not informed how much of that was profit to the liquidators.
Seventh, you might want to take a look at Muirly Doing My Job and contemplate what future was being planned...
The Art of Interpreting Figures
Source: Funny Times February 2001
For news articles on the Flat Rock Forests Trust, forestry, the Serious Fraud Office, one immigrant family's experiences, immigration
specialists, fraud, juries, logging, and more, pressing the "Up" key below will take you to the Table of Contents for this News
section. Or you may wish to visit the Forestry Trust Table of Contents to read how a unit
trust went bust. Or the Topics Table of Contents which offers a different
approach to lots of topics - among them poisonous insects, eating dogs, what's addictive, training vs teaching, tornados, unusual flying
machines, humour, wearable computers, IQ tests, health, Y chromosomes, share options, New Jersey's positive side, oddities, ageing,
burial alternatives, capital punishment, affairs, poverty, McCarthyism, the most beautiful city in the world, neverending work and