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Taxpayers face shortfall on Equitable Mortgages guarantee

Taxpayers face shortfall on Equitable Mortgages deposit guarantee: receiver

By Paul McBeth

Aug. 17 (BusinessDesk) – Taxpayers face a loss on clawing back funds from failed lender Equitable Mortgages Ltd., according to the receiver’s second report.

The government and secured debenture holders have been paid $35 million, or about 18%, of the $192.3 million owed, receiver Grant Graham of KordaMentha said in his report. About 6,000 investors owed $178 million were covered by the government’s retail deposit guarantee scheme, and as at June 24, 78% of that had been repaid by the Crown.

“We believe it is extremely unlikely there will be a return to unsecured creditors and we expect there to be a shortfall owing to investors and the Crown,” Graham said. “It will not be possible to recover the full amount outstanding, but the receivers are yet to confirm what portion can be collected.”

Equitable Mortgages, which was controlled by the family of the late Peter Spencer, called in the receivers in November, blaming ongoing asset deterioration, dwindling loan business and a lack of investment appetite for its failure.

In May, the lender forced two companies owned by Wellington property developer Terry Serepisos into receivership in a bid to recover $14.4 million.

Deloitte was initially appointed, but had to step aside after missing a conflict of interest with its audit team during the tender process.

The Spencer family injected $10.5 million into Equitable Mortgages at the start of November, subscribing for 10.5 million shares, according to Companies Office documents. That came as the family’s investment vehicle, Toocooya Holdings, sold its stake in meat packing company Affco Holdings for $48.9 million to Talley’s Group.

KordaMentha’s Graham said he hadn’t received a claim from the Inland Revenue Department yet, and estimated unsecured creditors were owed about $25,000.

The next report is due by April 12 next year.


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