Receivers for Lombard Finance & Investments have downgraded their forecasts of how much investors may recoup from the failed company as the property market continues to slide.

Receivers PricewaterhouseCoopers say investor returns may now only be between 17-29% of the $111 million owed, down from their December estimate of 19-40%.

An Inland Revenue audit on Lombard Finance & Investments is also holding up the first payment to investors, a year into the receivership.

PricewaterhouseCoopers has written to investors advising that the audit is being treated as a priority.

But any preferential claims that IRD identifies will have to be paid out first, so the first payment receivers had hoped to make by March is now on hold.

Some of the specific problem loans behind the downgraded forecast include a completed South Island residential development that is struggling to sell; an Auckland property that has been sold by the first mortgagee with nothing left over for Lombard; and the rising cost of finishing a partially complete development.

In most cases, the fact that it is taking longer to sell properties and that there are prior-ranking lenders is cutting down the sums that will flow in to Lombard.

So far receivers have recovered almost $10 million across the Lombard Finance group of companies.

They are also taking legal advice on the potential for action against a number of parties involved with the companies before receivership.

But they say they can’t estimate the probability of taking action or potential returns from it.