Perpetual Trust has announced that Dominion Finance has been put into receivership owing NZ$224 million to 6,055 investors. (Updated with more detail and background and news on North South Finance) After weeks of prevaricating over Dominion's proprosal for an extended moratorium on repayments, Perpetual has decided to pull the plug. Revelations in Dominion's accounts of a NZ$108 million loss for the year to March 31, despite Dominion saying in May it made a NZ$8.95 million profit, were damaging to its credibility and exposed a poor quality loan book. Dominion even said in June that it traded profitably in April and May. However, after a review it reported almost three quarters of its loans were impaired. The massive turnaround happened after a review by KordaMentha and an audit by BDO Spicers, which resulted in a qualified opinion on the accounts. This means there are 41 finance companies, mortgage trusts and investment funds that have closed, collapsed or gone into receivership since May 2006. They owe NZ$5.677 billion to investors with 170,029 accounts, according to our definitive Deep Freeze list. Perpetual Trust Chief Executive Louise Edwards said the decision was reached following an extensive review of the company.
"As part of this decision, we considered a wind-down proposal presented by the company. However, in the case of Dominion Finance Group, we consider receivership to be the preferable course of action as opposed to other alternatives such as a company managed wind-down under a moratorium," Edwards said. "In particular, debenture holders in Dominion Finance Group will benefit from the statutory powers of receivers to ensure their interests are best protected." Rod Pardington and Barry Jordan of Deloitte have been appointed receivers. The receivers will prepare and send debenture holders a report on their initial findings as soon as possible, Perpetual said. Covenant Trustees has agreed to allow North South Finance, which is part of the Dominion Finance Group, to seek a moratorium from its debenture stock holders. See here for more information on North South Finance.