Keeping a cool head in a volatile market -- Olly Newland's March 2008 column
"The property market has been in the headlines with increasing hysteria since before Christmas. A lot of the bad press has surrounded the collapse of numerous finance companies, the rise in mortgage interest rates and, increasingly, the Blue Chip fiasco (with which I have become regrettably all too familiar -- see below).
The credit crunch continues to bite overseas and here, with some big name banks and, of course, finance companies coming under more heat than is comfortable.
One commentator has stuck a flag in the ground and called a 'property crash' in 2008 or thereabouts as 'inevitable'. Naturally, the news media were all over that with relish. Is he right? What's the real position? And how might any such event affect what you want to do in property now?
Just ask the poor BlueChip investors. They have been among the first to feel the downturn. Many of them could write a book on their nightmare-ish experiences. Regrettably, there will be many more who will yet go through the pain that these folk are presently experiencing.
I first got involved in the saga when I was approached to help some investors who had signed over a large chunk of their equity to a Blue Chip scheme where three years later the promised apartment still hadn't been built.
With a bit of arm-twisting, number-crunching and lateral thinking I managed to get Blue Chip to cough up and refund their deposits -- several hundred thousand dollars. For another couple I arranged to have a Blue Chip contract cancelled putting them out of harms way.
More investors approached me for help so I set about using the lines of communication I'd opened up with Blue Chip -- meeting repeatedly with Blue Chip in the form of its founder Mark Bryers and his 2IC Neil Bell to press the investors' cases. This process started out with some promise in an atmosphere of sweetness and light -- well, not quite, but at least my detailed queries were met with (mostly) meaningful responses and warm assurances that things would be 'put right' and 'sorted out' as with my earlier clients.
As my team and I worked through the paperwork to get a sense of what was going on at Blue Chip our sense of unease grew. In mid-December, my colleague Peter Aranyi and I met with Neil Bell at Blue Chip HQ and asked some pointed questions -- the answers to which rang loud alarm bells to say the least. At another meeting later in December Mark Bryers (probably unintentionally) confirmed that several claims made in Blue Chip marketing material and contract paperwork were untrue. Looking back, this was a significant moment.
Blue Chip made some offers to the investors we represented to resolve some of the issues and backlog -- some offers were better than others -- and through January 2008 we appeared to be making progress. At the end of January, a meeting of investors was held in Auckland and the scale of the mess started to really emerge.
We didn't know it then, but it ended up being a race. On our side, we worked to collate the relevant information and get detailed section 281 Statutory Demands drafted and lodged on behalf of the investors -- a move which would start a timetable for us to commence winding up action against the named Blue Chip associated companies. This seemed our best hope -- at that stage -- of getting money back for the investors.
On Blue Chip's side, having fobbed off its clients for weeks and months with stories of developments 'getting underway shortly' or data entry problems, computer glitches and human error, the seemingly inevitable happened: First, on a Friday in February, they put a handful of BC companies into voluntary liquidation. Then, a few days later -- in fact the day after we served about 30 Statutory Demands -- another 16 Blue Chip companies were sent to the liquidators. We read through the list ticking off the names on our Statutory Demands. ..."
Read the rest of Olly's column here... (opens in a new page)
"The property market has been in the headlines with increasing hysteria since before Christmas. A lot of the bad press has surrounded the collapse of numerous finance companies, the rise in mortgage interest rates and, increasingly, the Blue Chip fiasco (with which I have become regrettably all too familiar -- see below).
The credit crunch continues to bite overseas and here, with some big name banks and, of course, finance companies coming under more heat than is comfortable.
One commentator has stuck a flag in the ground and called a 'property crash' in 2008 or thereabouts as 'inevitable'. Naturally, the news media were all over that with relish. Is he right? What's the real position? And how might any such event affect what you want to do in property now?
Just ask the poor BlueChip investors. They have been among the first to feel the downturn. Many of them could write a book on their nightmare-ish experiences. Regrettably, there will be many more who will yet go through the pain that these folk are presently experiencing.
I first got involved in the saga when I was approached to help some investors who had signed over a large chunk of their equity to a Blue Chip scheme where three years later the promised apartment still hadn't been built.
With a bit of arm-twisting, number-crunching and lateral thinking I managed to get Blue Chip to cough up and refund their deposits -- several hundred thousand dollars. For another couple I arranged to have a Blue Chip contract cancelled putting them out of harms way.
More investors approached me for help so I set about using the lines of communication I'd opened up with Blue Chip -- meeting repeatedly with Blue Chip in the form of its founder Mark Bryers and his 2IC Neil Bell to press the investors' cases. This process started out with some promise in an atmosphere of sweetness and light -- well, not quite, but at least my detailed queries were met with (mostly) meaningful responses and warm assurances that things would be 'put right' and 'sorted out' as with my earlier clients.
As my team and I worked through the paperwork to get a sense of what was going on at Blue Chip our sense of unease grew. In mid-December, my colleague Peter Aranyi and I met with Neil Bell at Blue Chip HQ and asked some pointed questions -- the answers to which rang loud alarm bells to say the least. At another meeting later in December Mark Bryers (probably unintentionally) confirmed that several claims made in Blue Chip marketing material and contract paperwork were untrue. Looking back, this was a significant moment.
Blue Chip made some offers to the investors we represented to resolve some of the issues and backlog -- some offers were better than others -- and through January 2008 we appeared to be making progress. At the end of January, a meeting of investors was held in Auckland and the scale of the mess started to really emerge.
We didn't know it then, but it ended up being a race. On our side, we worked to collate the relevant information and get detailed section 281 Statutory Demands drafted and lodged on behalf of the investors -- a move which would start a timetable for us to commence winding up action against the named Blue Chip associated companies. This seemed our best hope -- at that stage -- of getting money back for the investors.
On Blue Chip's side, having fobbed off its clients for weeks and months with stories of developments 'getting underway shortly' or data entry problems, computer glitches and human error, the seemingly inevitable happened: First, on a Friday in February, they put a handful of BC companies into voluntary liquidation. Then, a few days later -- in fact the day after we served about 30 Statutory Demands -- another 16 Blue Chip companies were sent to the liquidators. We read through the list ticking off the names on our Statutory Demands. ..."
Read the rest of Olly's column here... (opens in a new page)