The receivers of Mutual Finance have recovered the equivalent of 20% of the about NZ$9 million of taxpayers' money investors were paid out under the Crown retail deposit guarantee scheme 14 months after the property lender went belly up.
Receivers Grant Graham and Brendon Gibson of KordaMentha say in their third report that they've repaid NZ$1.8 million, or 20%, to the Crown thus far. In their second report they said the taxpayer faced a haircut on its payout as they were likely to recover no more than 53% of the NZ$9.3 million owed to 340 secured deposit holders when the property financier, with government guaranteed deposits, was tipped into receivership in July of last year by trustee Covenant Trustee Company after a breach of its debenture trust deed.
The receivership came much to the annoyance of Mutual Finance managing director Paul Bublitz, founder of the also in receivership Strategic Finance, who complained the company hadn't been given time to remedy the breach of its minimum capital ratio.
Graham and Gibson, who had been brought on board by Covenant prior to the receivership to review Mutual Finance's receivables ledger and cashflow leading up to the end of the Crown Guarantee period last October, were tasked with recovering NZ$8.2 million worth of loans, plus realisations from two properties with one in New Plymouth and the other in Cable Bay, a debtors ledger of NZ$396,000 and office furniture and equipment.
A total of 329 of Mutual Finance's investors have been repaid by Treasury in full.
Graham and Gibson, who say they're yet to receive a claim from the Inland Revenue Department, also say unsecured creditors owed about NZ$161,000 are "extremely unlikely" to get any money back.
Bublitz was also involved with Hunter Capital, which was behind Viaduct Capital, another property financier that collapsed with deposits guaranteed by the taxpayer.
The Serious Fraud Office (SFO) launched an investigation into Mutual Finance and Viaduct Capital last December after receiving information from KordaMentha, the Ministry of Economic Development and FMA predecessor the Securities Commission. However, the SFO said in June its initial investigation found insufficient evidence of fraud to warrant the use of its full investigative powers. Nonetheless, SFO CEO Adam Feeley said some information discovered "raised concerns" best considered by the Financial Markets Authority.
Viaduct Capital, was put into receivership in May 2010 owing 110 depositors NZ$7.8 million.Treasury has paid out NZ$7.5 million of taxpayers' money to 88 Viaduct Capital investors. Receiver McDonald Vague says depositors not covered by the guarantee can only expect to get back between 28 cents and 33 cents in the dollar, Viaduct Capital's unsecured creditors owed NZ$79,500, including one unsecured capital note holder owed NZ$5,000, aren't expected to get any money back.