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Lombard Finance receivers likely to make claim against third parties

Monday 11th June 2012

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The receivers for failed lender Lombard Finance & Investments has trimmed the top end of expected recoveries, and is likely to make a claim against third parties as they seek to claw back funds for jilted investors, according to their latest report.

The receiver continued to investigate Lombard Finance's transactions, and based on "current factual and legal assessment, it is likely that claims will be issued against third parties, with a view to making recoveries for the benefit of investors," PwC's John Fisk said in his latest update.

"We are not able to comment further on the exact nature of those claims at this stage because to do so may prejudice the claims," Fisk said.

The move comes as former Lombard Finance directors Sir Doug Graham, Bill Jeffries, Lawrie Bryant and Michael Reeves prepare to appeal their convictions for misleading investors by signing off on offer documents that omitted material information about the lender's liquidity situation in late 2007. A date for the appeal hearing has yet to be set.

The receiver estimates 3,900 secured debenture holders owed $111 million will get between 15 percent and 20 percent of their principal back. That's down from an estimated range of between 15 percent and 22 percent.

As at April 19, secured debenture holders have been paid 13 cents in the dollar, or $14.4 million in total.

The receiver realised $2.2 million from Lombard Finance's loan book between Oct. 11 and April 10, taking total net proceeds to about $20 million. Gross proceeds from the sale of loans, which include what's been paid out to higher-ranking creditors, were about $68 million as at April 10.

At the time of receivership in 2008, the firm's loan book was valued at $136.7 million.

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