Government to set up company to manage recovery of NZ$350 mln worth of assets from 6 failed finance companies

Finance Minister Bill English says the government will spend NZ$800,000 of taxpayers' money to establish a company to manage the realisation of about NZ$350 million worth of assets in failed finance companies, including South Canterbury Finance, which failed whilst in the Crown retail deposit guarantee scheme.

English says setting up the new company should halve the costs of managing the recovery of the assets, which would save about NZ$13 million over two years. The six companies whose assets will feature all have the Crown as their sole creditor. They are; South Canterbury Finance, Allied Nationwide Finance, Vision Securities, Mascot Finance, Mutual Finance and Rockforte Finance.

"The receiverships of these six firms have reached the stage where all the readily marketable assets have been sold," says English.

"Setting up a new Crown company to manage the assets that haven't yet attracted buyers will reduce costs and improve the value to taxpayers from the sales process."

His announcement comes on the same day South Canterbury Finance's receiver says it has now repaid NZ$395 million, or a quarter, of the NZ$1.58 billion taxpayer outlay on the company's receivership under the Crown retail deposit guarantee scheme.

"Bringing these companies together will create economies of scale, allow the use of specialists in distressed assets across all six firms, reduce monitoring costs and give the Crown greater control over the sales process," English says.

The Government aims to have its new company up and running by early 2012.

English also noted that the recovery from the South Canterbury Finance receivership was on track to meet Treasury's forecasts.

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