Capital + Merchant Finance investors can expect to recover less than two-thirds of their investments, say receivers Richard Simpson and Tim Downes of Grant Thornton.

In their first report released today, the receivers estimated they could recover up to 59 percent of investors' money.  It was clear they would not be able to fully recover investors' money.

Capital + Merchant Finance had $182.597 million in assets. It collapsed holding investor funds of $188.5 million from around 7000 investors.

The majority of its loans were for property development projects.  More than a third of its portfolio was concentrated on two borrowers, with $48.4 million (19 percent of the portfolio) lent to one and $41.2 million (16 percent) to the other.

For commercial and confidentiality reasons, the receivers could not provide further specific details on these individual loans.

Capital + Merchant Finance had insurance policies on 42 of its 55 loans, but the receivers are taking specialist advice to determine whether there was "effective" cover in place.

The receivers were appointed by Capital + Merchant's first ranking secured creditor, Australian firm Fortress Credit Corporation. 

But Capital + Merchant closed their doors to the receivers until they received a court order to take action on November 29 last year.

The court order noted Capital + Merchant Finance should not have been receiving public money for months based on a realistic assessment of its position.

At that time the financier's re-investment rate had fallen to 10-20 percent, from 50 percent a year previously.  A number of the properties the company lent money on had been unsuccessfully put up for sale.

Capital + Merchant sponsored TVNZ news as part of its advertising spend.

A full copy of the report will be available on Grant Thornton's website www.grantthornton.co.nz