KEY POINTS:
A finance company that promised to pay back 77 per cent of investors' money by Christmas has failed to give them even half of that.
Boston Finance entered into a moratorium in March after investors backed a proposal to pay them back all of their money plus 9
per cent interest within 20 months.
The company had hoped to make quarterly instalments starting on May 31 with a 13 cent payout, followed by a further 28 cent payout on August 31 and a 36 cent payout on November 30.
But so far it has paid back just 21 cents and the firm's independent adviser has warned the initial predictions are not likely to be met under the current market conditions.
Kordamentha partner Grant Graham said there was "no doubt" that the timeframe of the moratorium would be tested and he could no longer guarantee investors would get all of their money back.
"What we are saying is the period is under threat whereas previously we could comfortably see it happening in that timeframe.
"Whether it is going to be 90 we don't know - it's not likely to be 50. But it's incredibly difficult to predict."
Graham said the Boston Finance moratorium was one of the first to be put together and circumstances had changed dramatically since then.
The initial payment schedule had been based on the company's cashflows and if the proposal had been put together more recently those figures would never have been included.
Unlike more recent moratoriums a failure to make payment would not result in a default or the company being put into receivership, Graham said.
"Not paying is not an event of default."
The company was working to get the money back to investors as soon as possible but there was little point in setting timeframes as it did not know whether they would be met.
Graham said the key now was ensuring the process was valid in regards to the loans being wound down.
It reported to the trustee every month and was in contact with the company on a regular basis.
He said Boston Finance had been a good company that was bought out by MFS which then proceeded to let it down in terms of its guarantee. "It certainly was one that deserved a chance. It wasn't rogue management," he said.
Boston Finance originally owed $38.5 million to 1700 investors.