Another finance company down
LDC Finance, a small finance company with around 1000 investors, is the latest casualty in this sector.
Tuesday, September 4th 2007, 11:02AM
LDC had $23 million in finance receivables.
"The appointment follows a request from the directors of LDC Finance for the company to be placed into receivership because of serious concerns as to the state of the debenture and funding markets and the ability of the company to obtain new funds and retain existing investments," Perpetual Trust chief executive Louise Edwards says.
"In particular over the past week, following the collapse of other finance companies, the company has experienced an unsustainable level of demand for repayment of on call deposits.
Edwards says the directors reluctantly concluded the company was unable to operate in the current market and these steps have been taken to protect all investors and to ensure all investors are treated fairly.
"The directors stress that this position has not been brought about through asset quality issues which might bring into question the ability of investors to recover all of their money, but rather liquidity issues affecting the wider finance company sector."
They expect that every secured debenture holder and depositor will be repaid in full. The receivers say that the repayment of all deposits have been frozen and the requirement of borrowers to continue to meet their instalment and repayment obligations remains.
The receivers will consider selling the company, if that is not achieved then it is their intention to make quarterly distributions to the secured debenture stock holders. The unsecured depositors and unsecured creditors will only receive payments once the secured depositors have been paid their principal and interest in full.
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