Queenstown bankrupt Rod Nielsen faces a fresh investigation which could ban him from corporate life for another five years.
With Nielsen’s three-year bankruptcy ending in November – giving him the right to re-enter the New Zealand business arena – the Insolvency & Trustee Service has now referred Nielsen to the Registrar of Companies.
ITS spokesperson Alastair Stewart says the registrar will assess Nielsen’s case to decide whether to ban him from directing or managing a company after his bankruptcy ends.
“The registrar can order a prohibition period of up to five years depending on the nature of the conduct,” Stewart says.
With the permission of ITS, Nielsen relocated to Las Vegas, Nevada after his September 2009 bankruptcy – any ban in New Zealand is unlikely to affect his United States business affairs.
Mountain Scene tried to get Nielsen’s reaction via his last-known cellphone number and email but there was no response.
Nielsen was highly active on the Queenstown property scene in the go-go years before the global financial crisis. He developed several multi-million dollar complexes and subdivisions in the Wakatipu, among them the 34-unit Heritage Villas on Fernhill Road.
After being bankrupted by bust finance company Bridgecorp for $14.5m, other sums emerged and Nielsen’s total unpaid debts climbed to $34m.
Official documents later obtained by Mountain Scene show the Nielsen property empire was allegedly based on 100 per cent borrowings.
The revelation came in August 2010 from Nielsen’s lawyer, Ken Whitney of Auckland.
“Mr Nielsen’s mode of operation was to set up a development company owned by a separate trust for each project,” Whitney told the ITS.
“He did not inject any funds himself but was able to obtain 100 per cent-plus finance for each project.”
Development profits were destined for the relevant trusts, Whitney added, saying: “Unfortunately, I don’t think any of these projects were profitable so the trusts never accumulated any assets.”
The referral to the Registrar of Companies for a prohibition assessment may stem from comments by the judge who bankrupted the Queenstown high-flyer nearly three years ago.
High Court judge Paul Heath urged regulatory authorities to probe Nielsen’s behaviour “on grounds of commercial morality … to determine whether post-bankruptcy restrictions are appropriate”.
“Mr Nielsen must take responsibility for being at best imprudent or at worst commercially irresponsible,” Justice Heath says in his bankruptcy judgment.