Lombard distributions on hold until IRD claim is resolved

Wednesday 22nd December 2010

The receivers of Lombard Finance & Investments said no further distributions will be made to secured debenture investors until a claim by Inland Revenue (IRD) is resolved.

Lombard collapsed in 2008, owing 4400 investors $127 million.

IRD has been carrying out a goods and services tax (GST) audit of Lombard since the start of the receivership. As a result the IRD has advised that it may have a preferential claim of up to $4.5 million in the receivership. The claim related to the GST component of one specific transaction that occurred prior to receivership.

"We will be reviewing their claim to assess whether to accept it and whether the receivers consider it to be preferential or not," receiver PricewaterhouseCoopers said in a report.

Two interim distributions totalling 9.5 cents in the dollar have been paid to secured debenture investors because IRD has waived any preferential claim.

The IRD has now advised that as a result of the outcome of its audit it is no longer in a position to agree to waive any preferential claim in respect of any further interim distributions.

This means that no further interim distributions to secured debenture investors will be made until IRD's potential preferential claim is resolved.

NZPA

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