Capital + Merchant Finance Limited (In Receivership and In Liquidation)

Update 24 April 2012
Richard Simpson and Timothy Downes retired as receivers of Capital + Merchant Finance Limited (In Receivership and In Liquidation) on 21 March 2012. All future correspondence or enquiries should be directed to the second receivers Brendon Gibson and Grant Graham of KordaMentha phone 09 307 7865.

Update 28 February 2011
Following our last update, we have now completed realisations on all loans existing at the date of receivership. To date we have realised $96.5million from the companies’ assets and made payments of $88.2million to prior charge holders, which is made up as follows:

M$

Fortress

62.3

Other prior Charge holders

25.9

Total

$88.2

Following this, if Fortress was on the same priority ranking as the public debenture holders, the recoveries paid to investors in Capital + Merchant as a percentage of total debt is 26 cents in the dollar.

Fortress is currently owed $1.45 million by Capital + Merchant Finance and we are hopeful that these monies will be repaid from the proceeds of insurance claims by the end of 2011.
We are continuing to pursue recoveries under the Lloyds insurance policy and are experiencing difficulty with a number of loans where technical policy requirements were not adhered to prior to the date of receivership. We are continuing our efforts to make recoveries and cannot reliably estimate expected recoveries (if any) at this time.

The Securities Commission has laid charges against directors of CMF; the court process will take its course in this regard.  The Serious Fraud Office has laid fraud charges against directors, Wayne Douglas and Neal Nicholls and is continuing its investigations into certain other potentially fraudulent transactions, which may lead to further fraud charges being laid in due course.  The Official Assignee is also investigating as to whether there are any actions that they may wish to pursue.  An investor is taking action against Perpetual and CMF.

As the recoveries of the loans are now complete, the only additional recoveries expected (if any) are those under the insurance policy and possible actions against third parties. Due to the weaker economic climate and poor quality of the loans, realisations from the loans were much lower than initially expected.  As a result, we expect recoveries to debenture holders to be $nil from the assets of the company.  In our view, the only recoveries for debenture holders will be from any legal claims against various parties.

Contact: Tim Downes, Joint Receiver, Grant Thornton New Zealand Ltd, (09) 308 2989