Govt will only get back 28-33 cents on Viaduct failure
The government will only claw back as little as 33 cents in the dollar from the failure of financier Viaduct Capital.
Wednesday, August 18th 2010, 5:14AM
Some $7.3 million of the $7.8 million owed to 110 investors was covered by the government guarantee, but receiver Iain McLennan of McDonald Vague says the crown can only expect to claw back between 28 cents and 33 cents in the dollar.
The collapse of Paul Bublitz's Mutual Finance is dragging on Viaduct's potential recoveries, with the two firms looking to provide further funds on securities they each offered to maximise returns.
"As there is now no hope of that further funding, some securities have gone from our initial assessment of potentially providing some funds to the company, to having no chance of recovery," McLennan said in his first report. "Our estimate of recovery is possibly at the low end."
The remaining $500,000 owed to 16 investors came in after Viaduct was booted out of the guarantee after it failed to comply with related-party lending rules and did not undertake due diligence on loans from Bublitz's Hunter Capital Group.
Hunter's 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.
The receiver is seeking legal advice on the status of security sharing deeds Viaduct entered into, which saw the financier exchange its ranking charge for cash. Mutual received some of the deeds issued by Viaduct.
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