Crown claws back $645m from SCF

By Paul McBeth of BusinessDesk

Photo / Sarah Ivey
Photo / Sarah Ivey

The Crown has clawed back $645 million of the $1.78 billion it stumped up to pay out depositors of South Canterbury Finance and is in negotiations to finalise its takeover of the failed lender's assets.

SCF receivers Kerryn Downey and William Black of McGrathNicol paid the government a further $125 million in the six months ended February 29, bringing total distributions to $645 million since the lender collapsed in August 2010.

The receivers clawed back $74.8 million from the distressed loan book, realised $56.4 million from the sale of SCF's 33 percent stake in Dairy Holdings, and achieved a further $17 million from the sale of assets and properties and other receipts, according to the latest receiver's report.

As at February 29, the receivers held $108 million in cash and term investments.

"The receivers are presently in discussions with the government to finalise the purchase of certain assets by the Crown, which will then be transferred to Crown Asset Management," the receivers said.

The government stumped up $1.6 billion to pay debenture holders under the retail deposit guarantee, and also paid George Kerr's Torchlight fund $175 million on top of that, which held security above investors.

Finance Minister Bill English has since said the government will take control of some $350 million of assets from the failed finance companies through a new entity called Crown Asset Management, to control fees paid to receivers.

SCF was the biggest call on the government guarantee, under which the Crown stumped up about $2 billion and expects to write-off $1.1 billion.

The Timaru-based lender was singled out in the Auditor-General's review of the scheme as taking advantage of the offer by increasing its debenture base by 25 percent and ramping up its lending over risky property developments.

SCF's lending practices attracted the ire of regulators and five former executives and directors face 21 charges of fraud worth $1.7 billion, the bulk of which relates to the Crown guarantee.

- BusinessDesk

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