Boston Finance placed in receivership
Boston Finance trustee, Perpetual Trust, has put the company in receivership, ending the moratorium arrangement which has been in place since March last year.
Thursday, November 19th 2009, 12:30PM
At the time of the moratorium in March 2008, 1,300 investors had approximately $38.5 million invested in Boston Finance. Since then, $14.24 million has been repaid to investors equating to a return of 37 cents in the dollar. This includes a distribution of $2.30 million to be made now.
There are eight loans to be recovered with a book value net of provisions of $15.85 million. A substantial portion of the dollar value of these eight loans is subject to High Court litigation so it is too difficult to accurately estimate timing and recovery quantum.
After consultation with the directors and KordaMentha (as moratorium manager) and after reviewing and examining available options, the trustee has decided that receivership is the most appropriate course of action.
"While a moratorium was the appropriate course of action in 2008, investors' interests will now be best served by a receivership. We are confident that the loan recovery process is now at a stage where a professional receiver can best maximise recoveries of remaining assets," Perpetual Trust head of corporate trust, Matthew Lancaster said.
The view of both the trustee and directors of Boston Finance is that seeking an extension to the moratorium would have resulted in a costly process for investors, with little or no benefit to them.
Despite the challenging economic environment, the moratorium has enabled the directors to use their knowledge of the company to maximise recovery of 24 of the original 32 loans and put a strategy in place to maximise the recovery of the remaining eight loans. Up to this point, the trustee, KordaMentha and the directors of Boston Finance consider a moratorium has been more beneficial than a receivership.
Boston Finance is a wholly owned subsidiary of the Australian Octaviar (ex MFS) group which is itself in liquidation.
Perpetual has appointed Grant Graham and Brendon Gibson of KordaMentha as receivers.
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