NZF Group suspends interest payments on capital notes
NZF Group has stopped interest payments on capital notes because of a court-imposed freeze on its assets.
Last month, KordaMentha, the receivers of NZF Group subsidiary NZF Money, successfully applied for an interim court order freezing the assets of NZF Group.
The parties are now waiting for a court date to settle a dispute over the contentious sale of NZF Homeloans, a NZF Money subsidiary, to parent company NZF Group in 2010.
In an announcement to NZX today, NZF Group says it has a $270,000 interest payment due on its capital notes next month.
The receivers have refused to give consent for the payment, which NZF Group argued was an ordinary business expense.
"The board of NZF Group has met and resolved that in light of the receivers’ position under the freezing orders, the company must suspend interest payments on the capital notes," the statement said.
It went on: "It is the opinion of NZF Group that making the interest payments in the absence of the receivers’ consent would constitute a breach of freezing orders and would therefore be a breach of a legal obligation.
"Accordingly, it is likely that interest payments will remain suspended until the substantive proceedings connected with the freezing orders are heard and determined by the High Court."
Contentious sale for $1000
KordaMentha is pursuing a civil claim against NZF Group and five current and former NZF Money directors over the controversial NZF Homeloans sale.
In October 2010, the NZF Group board approved the sale of NZF Homeloans to its parent company for $1000.
Just two months later, NZF Group sold effectively 80% of its home loans division, including the assets of NZF Homeloans, to Australian company Resimac.
The receivers claim the NZF Homeloans portion of the deal snared NZF Group $3.03m.
Lender NZF Money went into receivership last July owing investors $16.4 million.