The receivers of Equitable Mortgages say it's too soon to say how much of the property lender's $188.4 million worth of loans they are likely to recover.
Receivers Grant Graham and Brendon Gibson of KordaMentha say in their first report that Equitable had $188.4 million worth of loans outstanding when it was placed in receivership on November 26 last year.
The provider of first ranking loans for commercial, industrial and residential property owes about 6,000 secured debenture holders $192.3 million. See Treasury's repayment information for Equitable investors' here.
On the loans, Graham and Gibson say it's not possible at this time to estimate the level of recovery from the loans, but note that Equitable, which was covered by the extended Crown retail deposit guarantee scheme, had a "significant" amount of cash on hand.
"The receivers are in the process of verifying the debenture investment register and will provide this information to the Treasury," say Graham and Gibson.
"This will enable the Treasury to commence its payout process."
It was not yet possible to say whether unsecured creditors would get any money back, the receivers added.
In November Equitable, part of Equitable Group owned by Christopher Spencer, said it had asked its trustee, Trustees Executors, to appoint receivers.
Equitable's then CEO, Peter Thomas, said at the time that if the receivership was managed correctly, the taxpayer shouldn't be left short changed.
Thomas, now head of property finance at the BNZ, said Equitable's board and management had wanted to conduct an orderly wind up of the business rather than place the company in receivership.
But, unfortunately Thomas said, under the Crown guarantee there was no mechanism for an orderly withdrawal.
Equitable had told government officials there was no immediate need for a cheque to be written and that Equitable's liquidity position could easily have seen it through to June this year. What the company wanted to do was cease taking deposits, withdraw its prospectus and meet payments in full as and when they fell due.
"However the Treasury's advice was 'we understand what you want to do and we're very supportive of that. However, we've only got one mechanism and either you're in the current (Crown) guarantee or you're out of it," Thomas said last November.
"So in the best interests of all stakeholders we had no other option but to ask the trustee to appoint a receiver."
Thomas said the business was solvent and didn't have a liquidity issue.
Equitable had a 58.3 per cent debenture reinvestment rate in the three months to September last year . The value of core past due assets in the Equitable Property Mortgage Fund at September 30 stood at $83 million, or 44 per cent of the total loan portfolio, up from 37 per cent at June 30.
Deloitte's Rod Pardington and David Levin were initially appointed Equitable's receivers but replaced by Graham and Gibson on December 17. Pardington and Levin said it had come to their attention that continuing as Equitable's receiver might "give rise to audit independence issues" for Deloitte.
"The relevant issues giving rise to this were not known and, given their nature, could not have been known by us until this was communicated after our appointment," Pardington and Levin said.
"We wished to take a conservative view on this matter for the purposes of the auditor independence rules to ensure that we are well within the boundaries of those rules. This gave us no choice but to resign our receivership role."