High Court liquidates LDC Finance

Failed Nelson-based finance company LDC Finance has been placed into liquidation.

Creditor Janet Wilson applied last month to have the company liquidated. It has been in receivership since 2007, when PwC receivers Malcolm Hollis and John Fisk were appointed.

In Wellington High Court yesterday, Associate Judge John Matthews placed LDC Finance into liquidation and appointed Iain Shephard and Heath Gair from Shephard Dunphy as liquidators.

They were appointed interim liquidators under court-ordered urgency after Messrs Hollis and Fisk announced late in July they would be stepping down as receivers, citing conflict of interest issues.

On July 26, they sent a note to investors advising of the change arising from court action between LDC Finance and associated company Finance and Investments (F&I).

The court action related to a series of dealings between the two companies in 2006-07 which saw good F&I loans swapped for worthless LDC shares.

In May, Justice John Fogarty ruled the swaps should not have been given approval and ordered more than $9 million be returned to those investors. PwC was holding the money at the time.

F&I investors used the judgment to launch a legal claim against PwC over advice given to LDC directors.

Mr Hollis says this could have given the perception of a conflict of interest and instead announced Grant Thornton’s Richard Simpson and David Ruscoe as the new receivers.

Associate Judge Matthews today agreed with that decision.

“It was only this more recent raising of an issue of a potential conflict, which we must always guard against for obvious reason, because this has to not only be well done but to look well done … it just has to be that people have confidence that fresh eyes are on the job.”

According to the PwC receiver’s report, secured investors in LDC were owed $12.4 million, of which $8.7 million had been repaid. Unsecured creditors were owed $8.8 million.