Confusion of bankruptcy leads to loss of home


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A piece of paper cost an Invercargill accountant who was declared bankrupt at home.

Darryl Robert Hewitson started his accounting business in Invercargill in 1997. He later fell ill with pulmonary sarcoidosis, a respiratory condition, which impaired his ability to work.

In a judgment delivered yesterday by Judge Rachel Dunningham, it is said that in 2009 Hewitson was served with lawsuits by some of his clients.

Hewitson owed a total of $412,038.53 to six plaintiffs, including fees and disbursements.

The unpaid amount still owed to creditors is $337,123.28 plus the assignee’s unrecovered time costs of $15,987.42 and unpaid disbursements of $19,413.12.

On November 18, 2009, Hewitson was declared bankrupt by the High Court of Invercargill.

An insolvency officer wrote to him the next day advising him of his obligations, including the need to file an inventory within 10 working days.

Despite repeated requests and the agent reminding Hewitson that his three-year bankruptcy period would not begin until the statement was received, he failed to file it.

In April 2010, Hewitson’s mother purchased his Regent St property for $180,000 and in May of that year he said he had sent the inventory to the transferee. However, it was never received by the assignee’s office.

Hewitson received $250,000 from his father in 2014 and he used $165,000 of it to buy his old house, believing he was already out of bankruptcy.

In March 2018, Land Information New Zealand advised Hewitson that a caveat had been filed against his property by the assignee.

“When he contacted the assignee’s office, he was told they had not received his statement of affairs and he remained an undischarged bankrupt.”

It was not until April 2021, three years after filing another declaration, that he was automatically released from bankruptcy.

The High Court appeal heard by Invercargill District Court on December 13 was
Hewitson’s application for judicial review to stop the sale of his property citing the transferee failed to consider all relevant circumstances, including the terms under which he reacquired the property and the changed circumstances of creditors.

Hewitson’s review of his creditors showed that some did not appear to be trading or were being evicted, that a business owner had died and that after a conversation he had with one of them in September 2021, he did not believe that the man had an interest in recovering sums.

Judge Dunningham said he had taken into account Hewitson’s interest in staying at home due to his poor health and the misunderstanding that he was already released.

“Despite this, he is in possession of substantial post-acquisition assets while his creditors have only received 25 cents in payment of their claims.

“In all honesty, I think we should start selling the property again.”

Judge Dunningham denied Hewitson’s request.

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Christina A. Kroll