NZF Money's receivers say there's likely to be a "material" impairment on the property lender's loan book and they can't yet forecast the likely level of recovery from the loans that'll be available to repay the company's NZ$16.4 million worth of debentures.
In their first receiver's report KordaMentha's Grant Graham and Brendon Gibson say they are reviewing NZF Money's loan book and have started collecting outstanding loans. When they were appointed on July 22 the loan book stood at NZ$28.3 million before the deduction of bad debt provisions.
"At this time it is not possible to accurately forecast the level of recovery from the loan book assets," Graham and Gibson say.
"We note that several loans of significant size have already been subject to previous restructuring, and in many cases valuations for security properties are well out of date."
"These factors logically give rise to concerns that there will be a material level of impairment on the loan book," the receivers say.
NZF Money, a subsidiary of the sharemarket listed NZF Group which also owns 50% of Mike Pero MortgageHoldings, was tipped into receivership in July by trustee Covenant Trustee Company due to an anticipated trust deed breach after NZF Group failed to secure needed short-term funding. This came after NZF Group had announced that NZF Money was "working through options" to address the impact of an expected NZ$3.5 million contract between one of its borrowers and a buyer not settling as expected.
The receivership also came after NZF Money was forced by the Financial Markets Authority, which raised concerns about NZF Money’s disclosures on asset quality and liquidity, to pull its prospectus meaning it could no longer raise money from the public.
Graham and Gibson say other assets to be realised include NZ$283,000 owed by NZF Group, a NZ$900,000 subordinated note owed by NZF Mortgages in its capacity as trustee of the NZF Mortgages Warehouse A Trust which is due to mature in September 2013, cash in the bank of NZ$428,000, and NZ$41,000 of fixed assets such as office furniture and computer equipment. Some NZ$33,000 of employee claims have been paid out with no claim yet received from the Inland Revenue Department.
Total unsecured creditor's claims are put at NZ$115,000 with Graham and Gibson predicting they won't get any of it back.
The receiver's report notes security interests registered over motor vehicles by Motor Trade Finances, Marac Finance, ANZ's UDC Finance, and Magnolia Lee Lease & Rentals. Graham and Gibson say NZF Money's directors, led by chief executive Mark Thornton, have co-operated with the receivers.