Finance company minnow Mutual Finance has collapsed into receivership owing $9.3 million of mostly Crown guaranteed funds to 340 depositors.
The receivership follows that of sister company Viaduct Capital and comes three months after Strategic Finance founder Paul Bublitz took control of Mutual with an 80% shareholding.
Mutual’s trustee company Covenant has appointed Grant Graham and Brendon Gibson of KordaMentha as receivers.
Covenant managing director Graham Miller said KordaMentha was brought in to review Mutual's receivables ledger and its immediate cashflow leading up to the end of the Crown Guarantee period.
Following receipt of that report and discussions with the company, Covenant decided it was in the best interests of stockholders for Mutual to be placed in receivership, a statement said.
Last week NBR reported Mutual and Mr Bublitz’s involvement in Hilltop Ridge Farms, a Taupo goat farm now in receivership. Mr Bublitz is behind Hunter Capital, an investment company linked to Viaduct Capital.
While Hilltop’s receivers would not reveal how much Mutual was owed, there was evidence to suggest an associate of Mr Bublitz, bankrupt property developer Peter Chevin, was involved in running Hilltop along with Hunter Capital. Mr Chevin is currently banned from being a director.
Mutual launched a prospectus to raise $20 million in March but the expiry of the government's original retail deposit guarantee in October was always going to be a challenge to Mutual’s liquidity.
Since May 14, while the investigations have taken place Covenant has required that all debenture application monies received be placed in a solicitor's trust account. These funds will be returned to the applicants.
Former owner Lindsay Kincaid stepped down from the board in April after Mr Bublitz's shell company Argus Capital boosted its holdings to 80% in March.
Mr Bublitz was joined on the new look board by Paul Hocking and Lance Morrison.
Related party activities involving Mr Bublitz and Hunter Capital were a factor in Treasury booting Viaduct Capital out of the guarantee scheme last April. The finance company would later go into receivership owing $7.8 million to investors, of which $7.3 million were still covered by the taxpayer.
The government recently added $54 million to its total provisioning for potential payouts under its retail deposit guarantee scheme, lifting total provisioning to $934 million at May 31.
The provision for losses considered more likely than not to occur is now $887 million.
In a statement released last night Mr Bublitz said the company was extremely disappointed Covenant had appointed receivers.
The company had been working on a technical breach of one of its covenants contained in its trust deed.
"The Board is deeply disappointed that it was not given the opportunity to resolve what it considers was an issue that was resolvable and considers that the trustee has acted in his own interests rather than those of the investors in placing the company into receivership."
Thu, 15 Jul 2010