The director of a Canterbury investment firm failed to appear at a High Court liquidation hearing where investors face a negative net asset position of nearly $12 million.
Bernard Whimp did not attend Monday's hearing in Christchurch concerning Chance Voight Investment Corporation and five related entities. The court rejected his last-minute application to postpone proceedings, and he had no legal representation.
The Financial Markets Authority, which initiated the liquidation action, alleges the Rangiora-based group was using incoming investment capital to fund payments to earlier investors. FMA counsel Richard May told the court "[r]ecords reviewed indicate that interest, and in some cases redemption payments to investors, were funded primarily through new investor funds".
Forensic analysis traced two randomly selected investors' deposits. May said analysis of one investor "shows that of the deposit ... a large proportion was used to pay another investor".
Interim liquidators have identified a negative net asset position approaching $12 million. May told the court the interim liquidators' report supported the regulator's view that the group was materially insolvent and meeting investor obligations through fresh capital.
Most CVI Group investors appear to be aged 65 and over. Interim liquidators found many had limited financial knowledge despite being classified as wholesale or exempt investors. The intricacy of the transactions and incomplete record access has prevented liquidators from estimating investor outcomes, though they expect a substantial shortfall.
Associate Judge Lester reserved his decision on the liquidation application.