Equitable Mortgages "no longer a viable business"

Friday 26th November 2010 5 Comments

The board of Equitable Mortgages has invited its Trustees Executor to appoint a receiver for the company.

Despite an orderly wind down of its group activities over the past three years - when its loan exposure has been approximately halved - the board deemed "there is no longer a viable business."

The company is an accepted entity under the Extended Crown Guarantee Scheme and while preferring an orderly scaling down of operations "this cannot be readily achieved under the current regulatory regime," the company said.

In a statement Equitable said in consultation with shareholders a number of factors had led to the decision including the continued asset deterioration on the small to medium sized commercial property sector, an absence of an acceptable new level of loan business and changed investor appetite.

"Accordingly, even through a going concern has been maintained with shareholder support up to the present, the board considers this can no longer be sustained."

Equitable said that at present its financial position is $32 million in cash on deposit, $188 million mortgages at net carrying value (all first mortgages), $191 million liabilities to debenture holders (with $179 million covered by the Extended Crown Guarantee Scheme) and $31 million capital.

The company said it has no bank or other indebtedness taking priority over debenture holders indebtedness.

Comments from our readers

On 26 November 2010 at 9:00 pm Greg said:

Just 4 months ago I was recommended by two professional advisers to invest $25k in debentures not covered by the scheme as the company was owned by a 'very well known' NZ family and had a good track record. It's all gone now!

On 27 November 2010 at 1:40 am Gary said:

If that's the only investment you've ever made, and if you've done it based on other peoples' advice rather than your own research, then while it's unfortunate, something like this was bound to happen.

On 27 November 2010 at 2:31 pm garry ince said:

My wife deposited 270 000 dollars about three months ago,does this mean that she will lose 20 000 dollars as the gvt will pay only 250 000. Garry Ince

On 28 November 2010 at 12:06 pm Ivan said:

Read the article carefully. It sounds as if the value of the company's assets still exceed its liabilities, but going forward it can't continue under the current regulatory regime. A receiver will hopefully sell the remaining assets and repay all liabilities.

On 29 November 2010 at 10:47 am Chris said:

No "professional advisor" worth their salt would be recommending debentures, let alone ones not covered by the DGS.