"Setting up a new Crown company to manage the assets that haven't yet attracted buyers will reduce costs and improve the value to taxpayers from the sales process," Finance Minister Bill English says.
The government is setting up a company to manage the recovery of the remaining assets of six finance companies placed in receivership while they had Crown guarantees.
"Right throughout the Retail Deposit Guarantee scheme the Government has sought to minimise disruption to the economy, while reducing the cost to taxpayers," Mr English says.
"The receiverships of these six firms have reached the stage where all the readily marketable assets have been sold. Setting up a new Crown company to manage the assets that haven't yet attracted buyers will reduce costs and improve the value to taxpayers from the sales process."
Mr English says the realisable value of the residual assets held by these companies is about $350 million and that establishing this new company is expected to halve the costs of managing the recovery of these assets - saving about $13 million over two years.
Nine finance companies were placed into receivership while participating in the Retail Deposit Guarantee and in six cases the Crown is the sole creditor. The six companies are: South Canterbury Finance, Allied Nationwide Finance, Vision Securities, Mascot Finance, Mutual Finance and Rockforte Finance.
"Bringing these companies together will create economies of scale, allow the use of specialists in distressed assets across all six firms, reduce monitoring costs and give the Crown greater control over the sales process," Mr English says.
The Government intends to set up the company and have it running by early next year. The cost of setting up the company is estimated at $800,000, which will be met from within current baselines.
The total amount recovered and repaid to the Crown from the nine receiverships so far is $523 million. About $395 million of this is from South Canterbury Finance.
