Bankruptcy cops are examining trusts linked to failed Queenstown developer Rod Nielsen.
The revelation comes from Insolvency and Trustee Service case officer Karen de Swardt – eight trusts are being scrutinised.
De Swardt says the service has sent files to its in-house accountant to investigate because there are a lot of Nielsen companies to comb through. “I think it’s more likely most of the shares were held in trusts.”
Those trusts are being checked for assets that may be seized to repay creditors, De Swardt says, adding the checks could take months.
Nielsen, 42, was bankrupted last September for almost $17 million.
At the time, Justice Paul Heath savaged his behaviour, branding it “at best imprudent or at worst commercially irresponsible” and signalling authorities to investigate.
Seventeen Nielsen companies have folded but one survivor is now selling its Queenstown asset.
Little Rock Management has management rights to 36 Heritage Villas developed by Nielsen.
Realtor Warwick Osborne won’t say who’s tendering those rights but admits he’s dealt with Nielsen and wife Sirene Millar “for the last seven or eight years in real estate”.
He won’t give indicative prices but Mountain Scene has been told the rights may fetch anywhere between $250,000-$800,000.
Official records list Millar as Little Rock’s sole director, taking over from her husband on the very day Nielsen resigned.
Nielsen holds half the Little Rock shares via a trustee company, with another person holding the other half via the same trustee company. “It’s a bit of a strange affair really,” says De Swardt, speaking about Little Rock’s structure.
“It’s not your usual sort of company.”
But Little Rock escapes Nielsen’s bankruptcy because of the trust nature of those shareholdings, she says.
“The thing is, [Little Rock] was set up like that to begin with – so [Nielsen] never transferred personally-held shares into a trust.”
It was also legal for Nielsen to step down as director – because bankrupts can’t be directors – then, acting as trustee, appoint Millar as replacement director.
“You’re able to act as trustee for a trust while you’re bankrupt,” De Swardt says.
Nielsen’s official address is Nevada.
“We gave him permission to go back to the United States” because there was no reason to refuse, De Swardt says.
Nielsen’s indicated he may come home shortly but if he then wants to return to Nevada, he’ll have to obtain fresh consent.
“He can’t just come and go as he pleases.”
Border control computers have flags to pick up undischarged bankrupts, De Swardt says.