The receivers of South Canterbury Finance (SCF) believe they have a good feel for the amount that will be recovered from the assets of the company, but are not willing to make the estimate public.
The receivers of South Canterbury Finance (SCF) believe they have a good feel for the amount that will be recovered from the assets of the company, but are not willing to make the estimate public.
Yesterday Finance Minister Bill English said the Government's expected loss from the retail deposit guarantee scheme -- put in place during the global financial crisis -- had risen by $331 million.
The scheme is now expected to have a net loss of around $1.2 billion, rather than the $900 million estimated earlier.
Most of the increase in the expected loss is due to a cut in expected related party loan recoveries from the SCF receivership.
The comments from Mr English were followed today by a call from Labour finance spokesman David Cunliffe for Mr English to resign over what Mr Cunliffe described as a scandal of epic proportions.
Receiver Kerryn Downey of McGrathNicol, said the receivers had been aware of the related party loans when appointed to SCF at the end of last August, but had since learned more about them and the chances of collecting them.
After concluding that collecting some of them would be a struggle, it had been necessary to increase provisioning.
"I think we have got a good feel and a good handle now on what we believe we will recover from the assets of South Canterbury," Mr Downey said.
But he could not predict the ultimate outcome of the various sales processes that were now under way, and would not speculate on what the final bill to taxpayers would be.
"We believe that the provisioning with respect to related party loans is as accurate as we can get it."
He also believed provisioning for other assets was "pretty close to the mark" but could not be sure until sales processes were completed, he said.
The provisioning for the other assets was sensitive to the receivership and the Government.
"To disclose what we think we will recover from the other assets, in fact, would be clearly prejudicial to our sale process," Mr Downey said.
Asked about comments from Mr Cunliffe that the Government could have accepted one of a number of recapitalisation offers for SCF, Mr Downey said he had seen one offer for the company within 24 hours of being appointed, and later in the week the same party had come back with a more formal offer.
It was a serious offer, but had a number of fish hooks, with huge uncertainty about whether the party involved could complete the deal, and in measuring what the outcome would be if the offer was accepted.
He also doubted the outcome would have been much different had a receiver been appointed to SCF six months earlier, given the severity of SCF's problems.
The receivers were close to offering SCF's consumer book for sale, and were well advanced on other books within the loan book, Mr Downey said.
They were to look at indicative bids this week for SCF's commercial plant and equipment finance business Face Finance, while other sales processes for major investments were under way and largely on schedule.
The sales processes would run for the next six months, perhaps longer, depending on the complexity of deals put together and time taken to settle.
He expected the taxpayers' final position would not be known for a year or more.
