Deloitte ready to chase Dominion directors
Dominion Finance receivers Deloitte are preparing to pursue claims against the company’s directors and officers, which may boost dismal returns to investors from the loan book.
In their latest letter to the 6000 Dominion debenture investors owed $224 million, Deloitte writes that it has put the directors insurers’ on notice of potential claims.
Dominion's directors are major shareholders Terry and Ann Butler, chairman Rick Bettle, Paul Forsyth and Vance Arkinstall.
Although investigations are still at an early stage, the receivers say they strongly believe that the way Dominion was being run led to significant losses before it collapsed.
Deloitte says these claims, together with potential returns from liquidators, could materially enhance returns to investors.
Liquidators have greater powers than receivers to reverse and claw back funds from inappropriate transactions.
The High Court at Auckland will hear an application to liquidate Dominion Finance Group in mid-May.
But Deloitte says it will take time to quantify the potential returns from these actions. So far it has not adjusted its initial forecasts of a 10-25% recovery for investors.
Deloitte blamed this low return on poor lending practices. In its last letter to investors, it said many of Dominion’s loans were second-ranking mortgages and its property valuations were often outdated.
Deloitte expects to make a first payment to investors in mid-May, distributing about $5.8 million in funds.