The receivers of failed finance company Lombard Finance & Investments say they've reached a $10 million settlement with former directors, their insurers and a third party over civil claims of breach of duty.
The settlement will allow receivers John Fisk and Colin McCloy of PwC to make a further 9 cent distribution to Lombard's secured debenture holders, bringing total paid out to 22 cents in the dollar, exceeding their estimate of a maximum 20 cents in the dollar. With the sale of two remaining properties, the total payment is now forecast to be about 25 cents.
The 4,400 Lombard Finance investors were owed $127 million at the time of the receivership in April 2008. Since then, former Justice Ministers Doug Graham and Bill Jeffries, former PR man for the Queen Lawrie Bryant and Lombard's ex-boss Michael Reeves have been convicted of making false statements. They avoided jail but are awaiting the outcome of an appeal against their sentences.
As part of the settlement, the Financial Markets Authority, which pursued criminal proceedings against the four, has agreed to discontinue its own civil claims against the directors under the Companies Act. Neither the third party nor the insurers were identified.
The FMA "is of the view that the PwC settlement represents the best outcome for Lombard investors, and that given it had limited prospects of achieving any better recovery through its own claim, it was in the public interest to consent to the settlement and discontinue its claim," according to the PwC statement today.
"A key factor in the settlement decision was balancing the time, costs and risks associated with litigation when compared to the certain outcome today," Fisk said.