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Mutual Finance becomes latest firm to fall

Wednesday 14th July 2010

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Mutual Finance has become the latest firm to fall into receivership, with $8 million of deposits covered by the retail deposit guarantee scheme. 

The Auckland-based finance company said it had been in technical breach of one of its covenants and its trustee, Covenant Trustee, had deemed there was a risk of a "cash flow mismatch" between the timing of asset sales and payments to depositors. Covenant appointed Brendan Gibson and Grant Graham of Korda Mentha as receivers. 

The receivership prompted Treasury deputy secretary of financial operations Philip Combes to issue a separate statement seeking to reassure depositors. 

"We expect it could take three or four months to get necessary information about all depositors," Combes said.

"When the receivers have provided the information to the Treasury, we will contact depositors and inform them about how to claim for repayment."  

Mutual Finance managing director Paul Bublitz said directors of the firm were "deeply disappointed" at the trustee's decision to call in receivers as it had been "working to address the technical breach and considers that the trustee has taken an extremely conservative view of the cash flows of the company."   

"The board is deeply disappointed that it was not given the opportunity to resolve what it considers was an issue that was resolvable and considers that the trustee has acted in his own interests rather than those of the investors in placing the company into receivership," Bublitz said.

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