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Strategic Finance liquidation not a fishing expedition, trustee says

Some transactions by Strategic Finance raised question marks for the receiver, and the firm’s liquidation is not a fishing expedition, according to the trustee.

Tuesday, July 27th 2010, 9:09PM

by Paul McBeth

Perpetual Trust's head of corporate trust Matthew Lancaster told depositrates.co.nz there were some transactions that were "more than worthy of scrutiny" and that the liquidators will have greater powers in investigating Strategic's deals leading up to its collapse. After it became clear the receivership would probably find a shortfall for secured creditors, Perpetual decided it was appropriate to call in the liquidators, Lancaster said.

"Some transactions have caught the eye of the receivers," Lancaster said. "It's not just a general order."

Perpetual applied for the order on June 17, and the High Court in Wellington granted the order on July 26. John Cregton and Andrew McKay of Corporate Finance were appointed liquidators. Corporate Finance is liquidating related companies Strategic Equity Partners and Strategic Investment Group.

Receiver John Fisk of PricewaterhouseCoopers said he did not have "very serious concerns" about any transactions at this stage, though if there are any which need to be reviewed, the liquidator has the ability to look at them.

Earlier this year, Commerce Minister Simon Power referred Strategic Finance to the Securities Commission after lobbying from ACT MP John Boscawen, who raised concerns about the status of some of the failed finance company's second-ranking mortgages in Parliament last year.

The liquidation will not have any impact on the receivership, which will continue to grind what it can from the realisation of Strategic's assets, Fisk said.

The sale of the finance company's loan book is continuing, with "several parties doing due diligence" at the moment, he said. Fisk expects to be able to make an announcement regarding a sale in the middle of next month.

Perpetual Trust called in the receiver in March, ending a moratorium arrangement that had been in place since December 2008. The finance company missed its milestone repayment on Jan. 7 after it failed to generate enough loan recoveries, and former chief executive Kerry Finnigan had put a Hanover-style debt-for-equity swap before the trustee in a bid to stave off receivership.

The company's loan book, which is the company's most valuable asset, has a net value of $229.1 million, though the receivers have relied on the figures provided to them. Strategic owes some 11,000 investors about $391.5 million.

 

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

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