is bolton insolvent

Now it seems Nicholas Bolton was not the Messiah – just a very naughty boy.

The Australian Securities and Investments Commission is investigating his deal with Leighton Holdings’ subsidiary Thiess John Holland and while they are at it the plods are looking at whether it should have been disclosed immediately.

Bolton’s problem revolves around insolvent trading. His company Australian Style Investments has arguably been trading while insolvent from the moment it bought 77 million units in BrisConnections, since that purchase involved an obligation to pay $77 million on April 29 2009, that it was never going to be able to meet – that is, it was unable to meet its debts as and when they fell due.

Last week Bolton agreed to sell his votes in BrisConnections to TJH for $4.5 million, but to quarantine the funds the transaction was between ASI’s parent company, Australian Style Holdings, which is a separate legal entity.

How was ASH able to sell the votes if ASI owned the units? That’s what ASIC wants to know.

Presumably ASI sold the votes to ASH for a nominal sum, but if it goes into liquidation then that could be a voidable transaction, not to mention a fraud on creditors (i.e. BrisConnections and its underwriters).

So a lot depends on whether ASI does go into liquidation because the $390 million call will be made on unit-holders in two weeks. Macquarie, at least, is working on an alternative.

While some of the leading trapeze artists in this circus would no doubt like to take Nicholas Bolton down a peg or two, pursuing hundreds of mums and dads and seizing their homes is not regarded as the best idea of 2009.

In which case, the ‘Life of Nicholas’ might not include a stint in the slammer, though he probably won’t be going to Queensland for his holidays.