Bridgecorp receiver squeezes out $4 mln more from insurance settlement
By Paul McBeth
Sept. 16 (BusinessDesk) - The receivers of failed lender Bridgecorp have eked out another $4 million in their seven-year administration after cutting a deal over a loan on which it held an insurance policy.
Receiver Colin McCloy of PwC has been in talks with insurers and other parties over the level and acceptance of claims for policies on 19 loans, and last month negotiated a settlement with one of those parties on certain loans, he said in his latest report on the administration, without identifying the party.
Earlier this year the Bridgecorp receiver lost a bid to pursue a $20 million claim against Lloyd's of London in the New Zealand courts, meaning it would have to sue the underwriter in England, where it's located. Lloyd's was dragged into the failed finance company's orbit as a result of underwriting Herbert Insurance Group, which Bridgecorp procured to cover loans it made on property developments.
When Herbert Insurance was placed in liquidation in March 2011, which prompted a Serious Fraud Office investigation into the insurer, Bridgecorp's receivers then sought the $20 million directly from Lloyd's.
McCloy is still pursuing potential action against third parties "in respect of their conduct prior to receivership" but can't accurately predict a time frame for resolution, he said.
The latest settlement comes after the receiver reached an $18.9 million deal with the former directors, their insurers and the Financial Markets Authority, over a civil claim against the directors that they had breached their duties under the Companies Act.
As at July 1, the receivers had realised 32 loans representing more than 85 percent of Bridgecorp's New Zealand loan book for a gross $164 million. Of that, just $22.13 million was available for the receivers after higher ranking interests. A further $8.87 million had been recovered that wasn't subject to prior ranking securities, generating $31 million from Bridgecorp's New Zealand loans.
When Bridgecorp collapsed in 2007 it owed some 14,400 investors about $459 million. Since the collapse, the receivers have achieved total receipts of $109 million as at July 1 of the $595.3 million book value ascribed to Bridgecorp in June 2007, including intercompany loans.
The Momi Resort development in Fiji created a big hole for the receivers, with no realisations achieved from the $106.6 million advances.
Some $54.8 million has been distributed to secured debenture holders, totalling 12 cents in the dollar, and any future payments will depend on insurance and legal matters, McCloy's report said.
Bridgecorp’s former managing director Rod Petricevic and chief financial officer Rob Roest received lengthy jail terms for misleading investors and making false statements, with an extra time added over charges brought by the Series Fraud Office. Among the other directors, Peter Steigrad and Bruce Davidson received home detention and Gary Urwin was sentenced to two years’ jail.