Viaduct Capital calls in the receivers
Viaduct Capital has called in the receivers, telling investors that most of them will get their money back from the government because the bulk of the funds were collected before the finance company was suspended from the deposit guarantee last year.
Friday, May 14th 2010, 3:05PM
Viaduct, which owes $7.8 million to about 110 investors, says only $500,000 of new money came in after the Treasury pulled its security blanket on April 20, 2009 and isn't backed up by the government guarantee, according to the firm's website.
The finance company fell foul of the government last year when the Treasury asserted it failed to comply with rules on related-party lending and general business conduct by not undertaking due diligence on loans from Hunter Capital Group.
Hunter's Paul Bublitz lent cash to Viaduct's shareholder, Phoenix Finance Holdings, after he had been engaged to source lending opportunities for the finance company. When the guarantee was stripped, the firm held about $14 million of deposits.
Since then, Viaduct's chief executive Nick Wevers quit the firm, and Bruce McKay and Richard Blackwood took over the management. Hunter's Bublitz is in the process of taking full control of Mutual Finance, another minnow finance company.
Iain McClennan and Boris van Delden of McDonald Vague were appointed receivers by Colin Wilson of Prince & Partners Trustee Co., on Viaduct's request, according to the finance company's website.
"The action is to protect the interests of investors through an orderly realisation of the company's assets," the website said.
Viaduct joins Mascot Finance, Strata Finance, Vision Securities and Rockforte Finance in calling on the scheme, which the Treasury estimates will cost taxpayers some $849 million, according to the government's financial statements for the nine months through March.
"Over the life of the scheme, exits, mergers and wind-downs will occur," said Brian McCulloch, Treasury's director of financial operations, in a statement. "This is normal financial sector activity and is expected to continue."
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