North South Finance trustee won't force receivership

Wednesday 10th September 2008

North South Finance, the unit of listed finance company Dominion Finance Holdings, will be spared a receivership for now after its trustee agreed to "an orderly supervised wind down."

Covenant Trustee Co. agreed to allow debenture holders of North South to consider a wind down plan after talks with ASB and BOS International who together control about as third of the debentures.

"We have received advice that indicates that an orderly supervised wind down has potential to produce a better outcome for debenture holders than receivership," Covenant said in a statement.

The trustee agreed to the plan on the condition it is supervised by insolvency specialists Korda Mentha. Covenant's statement comes after Dominion Finance's biggest unit, Dominion Finance Group, was placed in receivership by Perpetual Trust.

The ailing firm had been trying to negotiate repayments by installment after liquidity dried up. The company froze a total $276 million of debenture funds in June.

The shares of Dominion Finance Holdings last traded at 2 cents and have lost almost 100% of their value in the past year.

More than 20 finance companies have either failed or sought moratoriums in the past two years as the global credit squeeze and waning investor confidence made it harder to maintain enough funds to make payments to debenture and note holders.

By Jonathan Underhill

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