Allied Farmers, which took over Hanover Finance’s loan obligations, has increased a provision for any shortfall in a $7 million loan guarantee sold by its asset management services unit.

Hanover investors in the debt-for-equity swap with United Finance/Allied Farmers may get a tax break on the deal.

Allied Farmers is planning to pare back its share register bloated by its ill-fated Hanover transaction but the consolidation is complicated by additional shares being issued.