The Context
The High Court in Christchurch placed six Chance Voight entities into interim liquidation on 10 December 2025. The trigger was a $6.5 million related-party loan, disclosed by a former employee. The Financial Markets Authority (FMA) issued four compulsory information requests under Section 25 of its Act. It was not satisfied with the responses. The FMA formed a view the group may be insolvent. Its affairs may breach the Companies Act 1993 and the Financial Markets Conduct Act 2013. Director Bernard Whimp is subject to asset preservation orders. He recently solicited “donations” from investors for legal expenses. The group holds approximately $50 million in deposits.
The Risk
The risk is mathematical and personal. The $6.5m loan represents a 13% leakage from the $50m deposit pool. This creates a direct solvency risk. The audit trail from the FMA’s four notices indicates a governance failure. Directors may be personally liable for reckless trading under Section 135 of the Companies Act 1993 if they allowed the company to incur obligations without reasonable belief it could pay. The asset preservation order against Whimp is a pre-emptive financial freeze. It quantifies the regulator’s assessment of recovery risk. Breaches of the Financial Markets Conduct Act 2013 can attract penalties of up to $1 million for an individual. The court-ordered liquidation on 26 January 2026 will crystallise these liabilities. Your duty is to protect company assets. A related-party loan of this magnitude, without robust justification and arm’s-length terms, may indicate a failure of that duty.
The Control
Demand a forensic-grade review of all related-party transactions. This is not a standard audit. It is a transaction-level reconstruction. The control is a zero-tolerance policy for undisclosed or non-commercial related-party dealings. Implement a mandatory, board-approved policy requiring immediate disclosure of any related-party transaction exceeding a defined materiality threshold—for example, 0.5% of equity. All such transactions must be supported by independent valuations and ratified by a committee of non-conflicted directors. The policy must be auditable. The paper trail is your primary defence.
The Challenge
These are the critical questions you should be raising at the board table:
| Can you show me the independent valuation and board minutes that authorised the $6.5 million related-party loan, and prove it was on commercial terms? | |
| What is the total current exposure to all related parties, including off-balance sheet commitments, and how does this figure impact our solvency certificate? | |
| Where is the documented, board-approved policy that would have prevented this, and why did it fail? |