Almost 4000 out-of-pocket Lombard investors will still get only "peanuts" after the failed finance firm's receivers reached a $10 million settlement with its four directors, says one man who lost money in the company.
Lombard Finance & Investments' receivers, PwC, had made a civil claim against the company's former directors for alleged breaches of duties.
However, PwC announced yesterday a $10 million settlement had been reached involving the receivers, the four men, their insurers and an unnamed "third party".
"A lot of those secured debenture holders have either died by now or gone bust. Together with what has already been distributed I suppose it amounts to perhaps 20c [in the dollar] ... as I've said, it's peanuts."
The settlement will see another 9c in the dollar go to Lombard's 3900 secured debenture holders, who were owed $111 million when the company collapsed in 2008. This brings the total payout for investors so far to 22c in the dollar. One of the receivers, PwC partner John Fisk, said he hoped the payment would be made in about a month.
One person who lost money in Lombard, Lower Hutt man Paul Wah, said that while investors were "grateful for small mercies", the payment wasn't "great news".
"A lot of those secured debenture holders have either died by now or gone bust. Together with what has already been distributed I suppose it amounts to perhaps 20c [in the dollar] ... as I've said, it's peanuts," Wah said.
The Financial Markets Authority had filed its own civil case against the Lombard directors - Sir Douglas Graham, Michael Reeves, William Jeffries and Lawrence Bryant - but dropped this as a condition of the settlement agreement.
" ... FMA concluded that the PwC settlement represents the best outcome for Lombard investors, and that it was in the public interest to consent to the settlement and discontinue its claim," a FMA spokesman said.
"Today's announcement has no bearing on FMA's other civil claims [in other cases]," he said.
Fisk said he could not reveal who the unnamed third party was as it would breach the terms of the settlement agreement.
In the case of another failed firm, Nathans Finance, PwC had also targeted the firm's auditors in its civil claim.
The Herald asked Lombard's former auditors, KPMG, if the accounting firm was the third party involved in the settlement and a spokesman said he could not comment.
After yesterday's announcement, Lombard's receivers expect the final payout to secured investors to be 25c in the dollar and Fisk said he hoped the receivership would be wrapped up in about a year.
Fisk said capital note holders who had invested $10 million and subordinated note holders who had invested $3.7 million were unsecured and unlikely to receive any return.
The four directors were found guilty of Securities Act charges in the High Court and in the Court of Appeal were sentenced to home detention.
They appealed these sentences to the Supreme Court and while it has been heard, a judgment has not been released.