Potentially more litigation is on the horizon for Eric Watson as liquidators attempt to extract $57 million from the expat Kiwi businessman.
The Cullen Group of companies was placed in liquidation in December 2019 after the High Court declined to halt insolvency proceedings brought by the Inland Revenue (IRD).
An appeal against the a $112 million tax judgment was later abandoned.
IRD had been pursuing liquidation after Justice Matthew Palmer ruled in March 2019 that Cullen Group was part of Watson’s “web of entities” designed to avoid paying non-resident withholding tax.
In their fourth liquidators’ report released at the end of last week, KPMG’s Vivian Fatupaito and Luke Norman said they entered discussions with Watson’s representatives to try and recover about $57m owed to Cullen Investments, the main asset holding company in the group.
But the talks “have not resulted in any outcome.”
Now, the liquidators said, proceedings against Watson have been drafted and are ready to be filed in court.
“We expect to have proceedings filed within the coming weeks and to provide an update in the next reporting period.”
News of fresh proceedings follow the former co-owner of Hanover Finance – which collapsed at the start of the GFC – being charged with insider trading alongside two others earlier this month by the US Securities and Exchange Commission.
The regulator’s allegations of a “pump-and-dump” scheme centre around the share price spike of a Nasdaq-listed iced tea company, which Watson owned a 30 per cent stake in, as it transitioned to a blockchain technology company.
“This is a civil matter and will be dealt with via legal representatives in the US,” Watson has told the Herald of the New York case.
The liquidators said it appears a number of assets recorded in Cullen Investments balance sheet are either unrecoverable, have purportedly been transferred to another party, written off or are uneconomical to pursue.
They also said they were of the view Cullen Investments has a “large claim of approximately $3.6M” against Naked Brand Group (Naked) chairman Justin Davis-Rice, which he disputes.
“Demand has been issued and further correspondence has been exchanged. An update will be provided in our next report,” the liquidators said.
Naked acquired lingerie company Bendon, which was once majority-owned by Watson and his associated companies. Shareholders of Nasdaq-listed Naked approved the divestment of Bendon to a group of existing management, including Davis-Rice, in April.
The liquidators added Sir Owen Glenn’s Kea Investments (Kea) have recovered “significant assets” from Watson and his associated interests in the former NRL Warriors team co-owners’ long-running legal battle, which saw Watson imprisoned in London for contempt last year.
Formerly one of New Zealand’s wealthiest people, Watson has earlier claimed to now be impecunious. He said in a UK court statement last year – during his case with Glenn – the “small amount I spend on living is given to me by my mother”.
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