An Islamic bank has been burned by tens of millions of dollars from its investment in one of New Zealand's most iconic brands.

It has been revealed the Bahrain-based Kuwait Finance House was owed more than $54 million when it decided to pull the plug on Canterbury Clothing's European operations earlier this year.

According to a report by KPMG, the bank called in the receivers in August as a result of "significant losses" by Canterbury in Europe, and after months of "extensively marketing" the business for sale.

The brand was sold to giant British retail chain JD Sports shortly afterwards for $16.2 million.

The KPMG report estimates Canterbury's New Zealand holding company owed more than $100 million to creditors at the time of the receivership, including $54 million to the Kuwait Finance House, and $3.6 million to a New Zealand-born academic who lives in the United States, David Teece.

The other $43 million was owed to a creditor identified only as "Bridge SPC Ltd".

The receivers have estimated nearly $16 million is likely to be recovered from other companies linked to Canterbury, and $14 million elsewhere, leaving a total deficit of around $71 million. It is likely there will be a "significant shortfall" to creditors, they say.

KFH-Bahrain has had mixed success with its New Zealand investments. Its other investments here include Woosh Wireless, the Radius Health Group, and touchscreen technology company NextWindow.

Meanwhile, a civil court case in the United States has provided further insight into the buyout 10 years ago of Canterbury.

The case, in the US Tax Court, is a dispute between the Internal Revenue Service and the partners who bought clothing company Lane Walker Rudkin (LWR) from Brierley Investments (BIL) in 1999.

According to Judge Mark Holmes, Teece and his partners bought LWR in 1999 because they saw "hidden value" in the Canterbury brand, and believed they could make it more profitable by shifting production overseas.

They chose to use a New Zealand shell company because they "feared a wholly foreign deal would spur negative public reaction to the expected sale of an iconic New Zealand brand".

They also thought it would help the deal "survive New Zealand's own legal obstacles to overseas investment in existing New Zealand businesses."

However, "its ride turned rough, and the shell company that Canterbury was using had to pony up more money in 2000 and 2001 to make the deal go through".

Teece and his partners originally bought one-third of LWR, with a call option over the rest.

According to the judge, Teece complained that BIL "misrepresented LWR's financial situation", and BIL eventually agreed to mark down the price on its call option from $22.7 million to just $6.2 million.