Crumbs for creditors

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Bankrupted for $14.5m but Nielsen has live assets locally

 

Bankrupt Rod Nielsen has two Queenstown assets that could yield a few crumbs for the departed developer’s creditors.

Nielsen, 41, was based in the Wakatipu for about seven years until his empire began to unravel in April 2008.

His existing address listed in Companies Office records for two Nielsen entities is Las Vegas.

In the High Court at Auckland three weeks ago, Nielsen was finally bankrupted for $14.5 million lent by failed finance company Bridgecorp to develop Esplanade Villas on Queenstown’s lakefront.

Strategic, another failed finance company, is also owed $12m on the same development.

Bankrupting Nielsen, Justice Paul Heath savaged his behaviour, branding it “at best imprudent or at worst commercially irresponsible”.

The judge signalled financial authorities to investigate Nielsen’s affairs, broadly hinting he should be banned from business for longer than the statutory three years of bankruptcy.

While 17 Nielsen companies have gone broke, Mountain Scene knows of another two firms co-owned by Nielsen that are alive and kicking – holding Queenstown assets worth $2.8m.

Subject to mortgages and saleability, Nielsen’s shares could be worth up to half that when the Official Assignee seizes his stakes and turns them into cash for creditors.

Lakeview Trust Ltd – owned 50-50 with his estranged brother Greg – owns a Queenstown Hill home nicknamed “The Plasma Screen”, where Ferrari-driving Rod Nielsen lived with wife Sirene Millar, who drove a silver Mercedes convertible.

The Edinburgh Drive mansion is valued at $1.8m – though it’s not known if there’s a mortgage.

The other live company, Little Rock Management – also co-owned by the Nielsen brothers – holds management rights to Heritage Villas, developed by Rod.

In July, Mountain Scene revealed how Little Rock still clips the ticket on the 36 villas – even though Nielsen’s villa development com­­-pany Mondrian folded in July 2008.

Little Rock rakes in 12.5 per cent of rental income as “management fees” from villa rentals – totalling around $280,000 annually – and splits it with the adjoining Heritage Hotel, which actually manages the units.

Christchurch-based Adrian Chisholm of Tourism Properties.com, who frequently deals with management rights, says depend­ing on details in Little Rock’s 45-year management agreement, that contract could fetch around 3.5 times annual earnings – perhaps just shy of a million.

Heritage villa owners won’t be sorry to see the back of Nielsen – he’s left them with two bitter legacies, also as earlier reported.

Owners face shelling out $3000 each for new hot-water systems after another Nielsen company collapsed, leaving them without legal easements for boilers on adjacent land.

And there’s more – a $300,000-plus court case with Queenstown Lakes District Council stems from Mondrian’s failure to landscape a public reserve in front of the villas, as required by its resource consent.

Nielsen tacked a big performance bond on to Mondrian’s Bridgecorp loan to cover the landscaping but Bridgecorp went bust before QLDC woke up and almost all the bond went west – then Mondrian folded as well.

QLDC is now chasing villa owners as the sole survivors.

While the owners have a strong defence, their lawyer warns it will cost at least $30,000 to fight City Hall.