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Lombard receivers reach $10m settlement with former directors, insurers and third party

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.


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Comments and questions

Most Directors Insurance Policies do not pay out if the Directors have been convicted of a criminal offence or have acted illegally , as this bunch obviously have ,so I wonder how much was paid by the insurers and how much by the individuals. Also is anybody aware if they got their legal fees paid?.

What a joke, what did they contribute each??, I'm guessing the same as
what they lost.

Where are major firms that these four falsely relied on for professional
Advice and sign off
what value can any Director place on so called professional advice,with all the weaselled disclaimers , it paints a bleak future for Commerce when
Directors in NZ unintentionally make an omission from an offer
Document and are treated as these four,the sooner the FMA move to the ASIC system of prior sign off system.

The better for all honest directors and the public.

If we do this to Directors who have been found by the courts to have been both honest
And diligent what will do to those that make honest errors as Directors but are less diligent . where is the institute of Directors. asleep I think..

These directors were also significant investors in the company and so they lost heavily too. Justice Dobson found they were honest and diligent and the Appeal Court judges did not dispute that. As well, They offered extensive warnings as to reasons other investors should be wary in the prospectus that was issued. They failed only in having a differing view as to the significance of their outstanding debtors, who were in strife as a result of the GFC. One has sympathy with all who lost money as a result of these events, even if many did not read the prospectus, nor seek proper advice, but that is no reason for the wave of emotional baying for the blood of honest men who have suffered very severely already in this affair.

You mean, the directors had no inkling as to Lombard's spreadsheet as to the state of the loan book; no idea about the number of loans that were in arrears from the growing number of its delinquent borrowers; no idea as to the funds required to settle the maturing debentures that were scheduled ; no idea as to the number of ordinary investors wanting redemption in any given month?
The directors were caught completely off guard as to Lombard hemorrhaging money, prior to the receivers being called in -- is that right?

So what did they invest? and what did they lose, because where I'm standing they all seem to be living in the same house, driving the same cars, apart from a bit of face value the only thing they have lost is a pay cheque for turning up to a meeting or two. They all deserve to lose more.

Millions is how much they lost, In real Money $
Try and deal with facts..

Don't you mean millions of OTHER PEOPLE'S MONEY!
So if you know the facts, personally what have they lost?, and in the
meantime you might be able to point me to where these facts can be obtained.

Its a bit Basic but the Parent Company was listed on the NZX
the facts are public record, with over 20 Million of Directors Equity.

These put there own money first, which is rare, please check your facts.

Credit where it is due, this was listed Company on the NZX, the Directors had approx 30 Million of equity, its called Real skin in the Game

Be Honest and complete research first

This is purely paper money, you show me where actual money changed hands, not paper valuations, just because they assigned themselves a bunch of shares and put a value on it is not to say they fronted with the cold hard cash to purchase them, they had no skin in the game, and even if they did they probably sold off the shares before the ship starting to sink.

Regardless this bunch are all convicted criminals and should be treated as such , all through this process they have been arrogant , adopted a holier than thou attitude and only remorseful when it suited them to be so, the whole thing has been all about them and their reputations rather than the investors who lost money while they were all asleep at the wheel.