Former Hanover Finance boss Mark Hotchin cut a deal with the tax department after an audit of one of his forestry investments forced him to wind up the companies involved.
Hotchin's MSH Forests and subsidiary DF Forestry Holdings shut up shop in December after the investment companies failed following the Inland Revenue investigation, according to the first liquidators' report.
Hotchin, the sole director of the two entities, told liquidators Tony Maginness and Boris van Delden of McDonald Vague that the failure of the companies was due to the tax department's audit.
That led to the IRD succeeding in claims against the companies plus shortfall penalties, late penalties and interest.
"The liquidators understand that a settlement was made between the company and the Inland Revenue Department," the report said.
"At this time the terms of the settlement are unknown."
Hotchin has had to deal with intense scrutiny of his assets since the Securities Commission froze them at the end of 2010 to stop him from transferring ownership as it launched a probe into the affairs of Hanover Finance.
MSH Forests holds 95 percent of the stock in DF Forestry, with the remainder owned by Silver Oak Holdings, a holding company jointly owned by Nathans Finance directors and convicted fraudsters Mervyn Doolan and John Hotchin, the brother of Mark Hotchin.
The company had no assets at the time of liquidation, and estimated a shortfall of $4,274 to preferential and unsecured creditors excluding an unknown amount owed to the tax department.
DF Forestry had a book value of $307,090 as at December 20, with the bulk of that coming from its investment in Roxburgh Forestry Joint Venture.
Hotchin and fellow Hanover directors and promoters are expected to face civil proceedings this year from the Financial Markets Authority after a lengthy investigation.
Hanover is still under investigation by the Serious Fraud Office after a probe was opened in September 2010.
NZN