New Zealand High Court clears GDX liquidators to recover millions
The ruling followed a representative claim by Malcolm Hollis, a liquidator with Teneo Advisory Services NZ, against Southern Dairies Ltd (SDL) for $266,570. SDL was supported by about 50 other livestock vendors in challenging the liquidators’ position.
The payments concerned cattle supplied for the May 2022 Ocean Ute shipment to China. The farmers had been paid in full through an assignment-of-proceeds arrangement organised by Purcell Brothers SPV, an Irish entity, and Allied Irish Bank. The funds were routed outside GDX’s own bank accounts.
SDL argued that the arrangement meant the payments were not made directly by GDX. It also said that the suppliers had no reason to believe the exporter was insolvent when the transfers took place.
Justice Rachel Sussock rejected those arguments. She found that GDX remained the legal seller under the export agreement, was responsible for the shipment and had directed the third-party payment process. The judge also considered evidence that the structure had been created to avoid GDX’s accounts as concerns about the partnership’s financial position increased.
The court classified the transfers as voidable insolvent transactions under the Companies Act provisions applicable to limited partnerships. The liquidators are now preparing formal repayment demands for the 96 farmers and other parties originally treated as secured creditors. The claims will include roughly $9m in principal and interest accruing from GDX’s liquidation in September 2022.
About 140 farming businesses supplied livestock for the shipment. A further 47 farmers were not paid and remain in the unsecured creditor pool, which claims more than $11.3m. Farmers who repay clawed-back amounts, along with livestock agents, feed suppliers and service providers, may then participate in that pool for any dividend. Purcell Brothers must also repay its $630,000 commission before joining the unsecured creditors. The judgment sets out the treatment of payments made through third-party financing or escrow arrangements when the principal trading entity is insolvent.
