New company for Government receivership assets
The Government will set up a company to manage recovery of $350 million of assets from six finance companies placed in receivership while they had deposit guarantees.
Friday, October 28th 2011, 12:53PM
by Niko Kloeten
Nine finance companies were placed into receivership while participating in the Retail Deposit Guarantee and in six cases the Crown is the sole creditor.
These six companies are: South Canterbury Finance, Allied Nationwide Finance, Vision Securities, Mascot Finance, Mutual Finance and Rockforte Finance.
"Right throughout the Retail Deposit Guarantee scheme the Government has sought to minimise disruption to the economy, while reducing the cost to taxpayers," Finance Minister Bill English said.
"The receiverships of these six firms have reached the stage where all the readily marketable assets have been sold.
"Setting up a new Crown company to manage the assets that haven't yet attracted buyers will reduce costs and improve the value to taxpayers from the sales process.
"The realisable value of the residual assets held by these companies is about $350 million. Setting up this new company is expected to halve the costs of managing the recovery of these assets - saving about $13 million over two years."
"Bringing these companies together will create economies of scale, allow the use of specialists in distressed assets across all six firms, reduce monitoring costs and give the Crown greater control over the sales process."
The Government intends to set up the company and have it running by early next year. The cost of setting up the company is estimated at $800,000.
English also welcomed the latest report from South Canterbury Finance receivers, which shows $345 million was returned to the Crown from sales and other recoveries in the last six months.
"It's encouraging receivers have made progress returning funds to taxpayers through the sale of these assets and that the recovery process is on track to meet Treasury's forecasts," English says.
The total amount recovered and repaid to the Crown from the nine receiverships so far is $523 million. About $395 million of this is from South Canterbury Finance.
Niko Kloeten can be contacted at niko@goodreturns.co.nz
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