BNZ gets High Court agreement to sue former Zany Zeus owner

The Bank of New Zealand has obtained a judgment from the High Court to appeal against a personal guarantee given by the former owner of Wellington cheese and ice cream maker Zany Zeus.

Zany Zeus, whose name was verified by Hollywood star Scarlett Johansson for her chocolate cake, was sold during the Covid-19 Alert Level 4 lockdown after experiencing financial problems. She was placed in receivership for millions of dollars in December 2019.

On April 3 of last year, the business and assets were sold to a new company, Zany Zeus 2020 Ltd, for $ 1.8 million. The new company manages the café and the factory, which are still open.

Former owner Michael Matsis, who had given guarantees to BNZ on the company’s financial obligations in 2016, was employed by the new company.

* Zany Zeus sells after being placed in receivership
* Dairy company Zany Zeus could be sold by the end of February
* Scarlett Johannson’s favorite chocolate cake maker placed in receivership

In October, BNZ sued Matsis, claiming the difference between the bank’s losses from the sale and the maximum of $ 2 million he had guaranteed, as well as interest and contract fees.

The High Court ruled in favor of the bank, according to a summary judgment by associate judge Kenneth Johnston, QC, issued on May 19.

Matsis opposed the bank’s request.

The sales process was appropriate and robust, said receiver Richard Nacey.


The sales process was appropriate and robust, said receiver Richard Nacey.

Matsis’ attorney, Callum Reid, said the receivers, with BNZ’s consent, had failed to secure the best price for the sale, resulting in loss and damage to Matsis.

Reid argued there was a possibility the receivers panicked when the initial foreclosure was announced and were “tunneled” into the sale at any price, according to the ruling.

He also claimed that the conduct of the receivers and the bank before the sale did not prevent him from forcing Matsis to stand surety.

In an affidavit, Matsis said, “When I worked with the receivers, they always led me to believe that if I cooperated and worked hard, the bank would be happy and would not sue me under my personal guarantee.”

In response, BNZ director Michael Williams said that at no point did BNZ tell Matsis that was the case. Receiver Richard Nacey also denied that statement to Matsis.

BNZ had no direct involvement in the negotiation or sale, although the receivers kept the bank apprised of the process, Nacey said.

On March 6 last year, Gerald McDouall, who led the consortium, signed a binding and conditional offer of $ 3.5 million for the company, which the directors of PWC accepted.

McDouall came back with a price of $ 1.5 million plus the shares, about $ 2 million below the conditional offer. Recipients responded with an offer totaling $ 1.8 million, which was accepted in April.

Hours after the government announced the lockdown on March 23, McDouall received a call from Nacey, who said the receivers were considering shutting down the business and putting the assets on hold.

Nacey asked McDouall how the consortium was going to meet the terms of the offer and, according to McDouall, “I’m not going to lose my house because of this.”

“He asked what it would take for us to immediately waive the conditions to reduce this risk,” McDouall said, according to the judgment.

“Feeling an opportunity that I advised on the price was always an option. He asked me to come back with a reduced price to immediately waive the conditions.

Nacey said he couldn’t recall using the phrase “ I’m not going to lose my house because of this, ” but expressed concern to McDouall about the risk of continuing the trade.

Nacey said that once the foreclosure was announced, receivers feared they could be personally liable for business losses during the receivership.

The revised $ 1.8 million offer was good under the circumstances, and the selling process was appropriate and robust, Nacey said.

Prior to the sale, the receivers obtained an appraisal from JLL which gave an approximate value of $ 775,000 plus GST to the assets subject to the BNZ guarantee.

“This is the approximate value that Mr. Fisk and I considered achievable if the company ceased operations and assets auctioned off,” Nacey said.

Following the sale, the receivers paid BNZ approximately $ 1.37 million.

Justice Johnston said there was no evidence for the court to conclude that the receivers panicked or that BNZ improperly interfered with the receivers’ actions.

“Ultimately, for these reasons, I am confident that the bank is in a position to make its claim and that Mr. Matsis has no reasonably defensible defense against the same,” he said.

Costs have been reserved.

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