No loss estimate in receivers' first South Canty report
Receivers for South Canterbury Finance have omitted any recovery estimates in their first report on the finance company which collapsed in late August, triggering a $1.775 billion payout under the Crown's retail deposit guarantee scheme.Kerryn Downey and
Mon, 01 Nov 2010
Receivers for South Canterbury Finance have omitted any recovery estimates in their first report on the finance company which collapsed in late August, triggering a $1.775 billion payout under the Crown’s retail deposit guarantee scheme.
Kerryn Downey and William Black of McGrathNicol were appointed receivers on August 31 after attempts to recapitalise South Canterbury were unsuccessful.
Their first report posted on the Companies Office website shows at the time of receivership South Canterbury had total assets of $1.4 billion and total liabilities of $1.7 bllion.
Loan advances totaled $1.56 billion, less impairment provisions of $446.28 million.
The balance sheet shows a shortfall of $314.78 million – about the same as the government’s estimates for taxpayer losses for the entire retail deposit guarantee scheme.
Last week they appointed Deutsche Bank to advise on the sale of the finance company business and Goldman Sachs & Partners (NZ) for the Helicopters NZ and Scales Corp assets.
“We have omitted from this report our realisation estimates of the assets as we believe that their inclusion could materially prejudice the exercise of our functions, and in particular, our duty to obtain the best price reasonably obtainable for the company’s assets.
A breakdown of South Canterbury’s loan advances showed business lending made up the bulk of the book at $690.8 million with property next at $256.2 million, followed by rural at $179.6 million.
The receivers said they were aware of “a number of concerns” raised by investors and other parties prior to their appointment.
“We have notified the appropriate authorities in relation to certain specific transactions that took place prior to our appointment as receivers.”
The Serious Fraud Office has already said publicly it is investigating several related party loans made by South Canterbury or its subsidiaries.
The receivers said their initial focus was to stabilise the business, including retaining the management team and all staff, and continuing all branch operations in order to preserve value for all stakeholders.
They said South Canterbury would continue to actively manage defaulting borrowers, a move they said was vital to preserve creditor value. "This may include appointing receivers or sale of the underlying assets securing the lending."
Mr Downey said the receivers were "well advanced" in developing appropriate strategies for preserving and protecting the value of investments and ultimately selling them.
Among preferential creditors were employee claims of $901,000 and IRD claims totalling $5.6 million. The receivers expect preferential creditors to be paid in full.
The receivers noted that all figures in this first report rely on information provided by SCF which has not been independently verified or audited.
The next statutory report will be released in the first quarter of 2011.
Read the full receivers' report here.
Mon, 01 Nov 2010
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