Reluctant shareholders have lost over $41m to date…..are the Duval Directors liable for this?
Just how much Director liability insurance was carried is anyones guess – several sources say none was carried.
As the slow motion train wreck that is Duval is being unpicked by PwC, and overseen by the FMA, the Directors all await their fate.
Is that fate a lengthy prison term? Will they be personally liable for the shareholder loses inline with what unfolded at Mainzeal?
Just how long was Duval and its group of entities insolvent? It’s highly likely that it was for a considerable length of time longer than currently known.
So far the Clarke’s have protested their innocence and made various claims via the media that Duval was not insolvent, that PwC are wrong, with Kenyon Clarke himself saying that his response will be “biblical” when the time is right. However, noticeably silent are the other Directors, John Dalzell, Owen Culliney, and accountants, Herbert Morgan. Is the shadow of Dame Jenny Shipley and the Mainzeal Board front and centre of their thinking?
The Supreme Court in New Zealand upheld the lower Courts findings with regard to the conduct of the Mainzeal Directors, which included ex NZ Prime Minster Dame Jenny Shipley, who found themselves in a protracted court proceeding that saw them held personably responsible, and personally liable for running an insolvent entity. Millions of dollars in damages were awarded to the liquidators against the Directors of Mainzeal.
It appears there are many similarities between the way these 2 businesses were run. In particular in terms of insolvency and incompetence at Director and Board level, with what looks like a deliberate blind eye being turned when it came to looking after shareholder interests.
Continuing to trade whilst insolvent is a breach of s135 and s136 of the Companies Act – and just as in Mainzeal, the Directors of Duval appear to have been fully aware of the precarious position that Duval was in at the time, yet they continued to trade, whilst Kenyon Clarke continued to make bullish and outrageous claims via his Instagram account as to company asset value, and his own personal net worth, which in our opinion was simply designed to continue the “Duval propaganda machine” in order to keep the circling creditors at bay. Just last week PwC noted that the Clarkes had personal assets of just $11,000.00 – somewhat less than the ever changing figure of $400m, $600m, and $750m that the Clarkes have claimed previously.
The public unravelling of Duval started when China Construction Bank recalled its loan. At this point and time Duval and its Directors knew the loan could not be repaid, and they had a $41m problem on their hands with no way of repaying any money owed to the Duval investors, and thus embarked on the ill-conceived, and likely fraudulent “debt to equity” swap – duping investors into becoming shareholders with a deliberately deceptive, and misleading Information Memorandum (IM).
Quite clearly at this point Duval was likely irretrievably insolvent, and more concerning is that the Directors knew that to be the position, yet they still continued on with the promotion of the IM they had prepared internally, that until the Statutory Management was ordered by the Court, went largely unchecked as to its facts. Nonetheless, the Directors still signed off on its content and set about continuing to fraudulently trade whilst hopelessly insolvent.
Not only was Duval insolvent, but there was (according to the Receivers), irregular accounting that warranted further investigation, including dubious asset vales and related party transactions. Once again all known by the Board and Directors well in advance of the Statutory Management being ordered by the High Court, and used to coerce investors into becoming shareholders.
Perhaps it’s time for the shareholders to get in touch with MinterEllisonRuddWatts, the law firm who tackled the same issues at Mainzeal.
