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Receivers hope to get a further 5c for Lombard Finance investors

The receiver for failed financier Lombard Finance and Investments have secured enough cash to make a 2.5% payment to investors, and is hoping to double that.

Monday, July 5th 2010, 8:09PM

by Paul McBeth

John Fisk of PricewaterhouseCoopers said recovery action for certain loans could boost the interim distribution to 5 cents in the dollar, on the company's website. That comes after he downgraded the estimated recovery to between 15% and 24% in a February letter to investors, from the previous range of 17% to 29%.

The latest receiver's report, lodged with the Companies Office, said Fisk was focusing on two significant loan exposures, both of which have been put into receivership.

At $42.6 million, the Brooklyn development loan is Lombard Finance's biggest exposure, and Fisk said he is considering other options to realise the value of the assets after an unsuccessful tender process.

"Given that the Brooklyn Development loan makes up 31% of LF&I's loan book, the level of loan recovery will have a significant impact upon the overall level of return to secured debenture holders," Fisk said in his report. "For reasons of commercial sensitivity, we do not propose to disclose the estimated recovery from this exposure at this stage."

The report said the receiver's investigations focussed on the most significant loans, including the Brooklyn development exposure, and documents are being assessed by lawyers to determine what action, if any, companies may have against parties to help the recovery for investors.

As at April 9, some $12.3 million had been recovered from the property loan book of $136.7 million. The commercial loan book recovered about $1.9 million, while property sales and other asset sales netted almost $2 million.

Four directors of Lombard Finance face criminal and civil charges over the promotion of the finance company in 2007 and 2008.

The financier was sent to the receivers in 2008, owing some 4,400 people about $127 million.

 

Paul is a staff writer for Good Returns based in Wellington.

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