It's usually the bean counters who reap the most when a company falls into receivership - but in Bridgecorp's case, it's the lawyers who are smiling all the way to the bank.
Legal costs and fees paid by Bridgecorp while in receivership rose to almost $3 million between July 2007
and January 2009, and were higher than receivers' costs over the same period.
Bridgecorp is the only finance company in receivership in New Zealand for which legal costs are higher than receivership costs, research done by financial website interest.co.nz shows.
The total legal costs and fees of $2.88 million includes $910,000 in the six months from July 2008, receivers PricewaterhouseCoopers' latest report showed.
This compares with receivers' costs of NZ$2.53 million over the one and a half years since Bridgecorp was placed in receivership. Together, legal and receivers' fees were around 9.2 per cent of the likely return to investors (July 2008).
Legal costs on their own represented 4.9 per cent of the estimated return. However, in December 2008, the receivers said they were unable to predict an overall updated range of returns because of the ongoing deterioration in the current economic environment, which they later said would "impact negatively upon both the options available and the level of realisations achieved in respect of the assets of the Charging Group."
Bridgecorp's legal costs and fees were more than four times greater than legal costs and fees paid by any other finance company currently in receivership, with the next highest being $610,000 for FiveStar.
"Legal services to date include general receivership advice, loan specific legal requirements, litigation as required, property administration and transfer, and loan documentation," receivers Colin McCloy and Maurice Noone said in the latest Bridgecorp receivers' report.
- INTEREST.CO.NZ
