The receivers of failed Belgrave Finance have slashed their estimated recovery for investors from the mezzanine property lender and say they have referred matters around a series of improperly secured and documented loans to "appropriate regulatory authorities" for further investigation.
In an update to Belgrave investors last month
Grant Graham and Brendon Gibson of Korda Mentha said: "the negative effects of the world financial crisis on the New Zealand economy" were having "a severe impact on the collectability of the Belgrave loan book".
"As a result, we must now regrettably forecast a lower recovery range for investors than that previously indicated."
Gibson and Graham expected the eventual return to secured debenture investors would be between 19c and 36c in the dollar, well down on the 37c to 50c range they advised in their September update.
An initial payment of 5c in the dollar was likely later this month rather than the 10c to 15c payment the receivers had previously hoped to pay last month.
Gibson and Graham also said they had continued their investigations into a group of loans "previously identified as being irregular".
"We have uncovered a number of instances where loans were not properly documented or secured and the commercial nature of the loans is unclear."
Belgrave's directors Shane Buckley and Stephen Smith, who are also the company's owners, had been further questioned about the loans but had not provided satisfactory explanations.
"These matters have now been referred to the appropriate regulatory authorities for further investigation," said Gibson and Graham.
Auckland based Belgrave, with a $30 million loan book, became the 20th finance company casualty when it failed in May last year owing about 1000 debenture investors $22 million.
