Crown, investors to get another $35M from Equitable Mortgages
Investors are set to receive $35 million from the receivers of failed lender Equitable Mortgages in the third payment since debenture holders were bailed out through the Crown's retail deposit guarantee scheme almost two years ago.
KordaMentha's Grant Graham flagged a third distribution payment will be made today, taking total repayments to $85 million, or 44 percent of the principal, according to the latest receiver's report. He kept his forecast recovery at between 65 percent and 70 percent of the $192.3 million owed to the Crown and investors. Unsecured creditors are owed some $25,000.
"We believe it is extremely unlikely there will be a return to unsecured creditors and we expect there to be a shortfall owing to investors and the Crown," Graham said in his report.
At the time of receivership, Equitable Mortgages had loans worth $188.4 million to be recovered, net of provisioning for impairments. Between Dec. 19 and June 18 the receiver got some $20 million in loan repayments, and a further $126,000 in loan interest.
The bulk of the funds are owed to the government, which has paid out 99 percent of the $178 million to about 6,000 investors whose debentures were covered by the now-defunct retail deposit guarantee scheme.
Graham said he had reached a $12.5 million settlement with Equitable General Insurance over loan loss cover policies since the end of the reporting period.
Equitable Mortgages, which was controlled by the family of the late Peter Spencer, called in the receivers in November 2010, blaming ongoing asset deterioration, dwindling loan business and a lack of investment appetite for its failure.
Deloitte was initially appointed, but had to step aside after missing a conflict of interest with its audit team during the tender process.
Graham said he has yet to receive a claim from the Inland Revenue Department.
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