Quick Fire Finance of The Day:
"I invested $5,000 in a crowd-funded start-up company in 2016 with the knowledge that I could well lose the money but also with high hopes that it would pay off. The company has gone into liquidation with no acknowledgement or notice to investors (apart from the obligatory Gazette notice — who reads those on a daily basis?). I learned of the company failure via a NZ Herald news article.
I have submitted an (unsecured) creditor’s claim form but received no acknowledgement or update from the liquidator who, in this case, has a conviction for tax fraud, according to the Herald article.
After returning my Creditor’s Claim Form I heard nothing, and so after a time I emailed both the company founder (who was extremely friendly and open with communication both by phone and email when he wanted money), and the liquidator. I did not even get the courtesy of a reply.
I have since learnt that the directors of a failed company can choose the liquidator, and almost anyone can be appointed, and that the liquidator does not even need to be a professional. With no transparency and no requirement to keep investors informed, I see this area as urgently needing a review and new laws put in place.
To be “courted” as an investor in a second funding round (at a time when it now appears the company was already struggling), and then left completely in the dark as to what has happened is unacceptable and open to fraud.
Further, when it is a small uncomplicated company, probably with no assets, why is a liquidator appointed at all? If any money was available for investors it would certainly be used to first pay the liquidator’s fees. Why isn’t an accountant able to wind up an uncomplicated company, which might result in at least some money being available for investors?"
Source: NZ Herald 27th of October 2018
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