Bridgecorp reparation waits to be distributed

Bridgecorp founder Rod Petricevic. Photo / NZPA

Former Bridgecorp chairman Bruce Davidson's $500,000 reparation payment has not been distributed by the High Court despite being collected more than a year ago.

Davidson pleaded guilty in October last year to misleading investors and was sentenced to 9 months' home detention, 200 hours' community work and ordered to pay $500,000 reparation.

The failed finance company's chairman, who is in his 70s, handed a cheque for that sum to the court on the afternoon of his sentencing in Auckland. But this money - with $350,000 paid in by fellow guilty Bridgecorp director Peter Steigrad - is still to be distributed.

The Financial Markets Authority, which brought the case against the directors, said on Friday it hoped the issue would be "resolved shortly".

Although there is $850,000 being held, it is not clear if the money will be treated in the same way as the reparations paid by guilty Nathans Finance directors.

In the Nathans case Justice Paul Heath ordered that nearly $900,000 of reparations from three former directors should go to the failed finance company's receivers, PwC.

Before the judge reached this decision, questions arose over whether the reparations should go to those who put money into Nathans after the company released a misleading prospectus or to the receivers for the benefit of all investors.

While PwC made a push for the money in the Nathans case, the Crown said the court registrar should be responsible to distribute payments to investors.

Steigrad's lawyer, Brian Keene QC, told the Herald last week he was not aware of any dispute over how the Bridgecorp money should be distributed and said the principles applied in the Nathans case appeared to be the right ones.

"If the principle's right in one case, I have some difficulty seeing why it wouldn't be right in another," Keene said.

Bridgecorp's 14,500 investors, who were owed $459 million when the company went into receivership in July 2007, have to date got back 8c in the dollar.

In its last receivers' report, PwC said it was unlikely more than 10c in the dollar would be returned to investors and that future cash flows were "largely dependent on insurance and legal matters".

PwC has launched one of the biggest civil cases in history against three former Bridgecorp directors, Gary Urwin, Steigrad and Davidson.

The civil action is a $442 million claim against the directors for alleged breaches of duty.

If payment is then not received, a bankruptcy will be ordered, leaving it up to the official assignee to reclaim any money by dissolving assets.

Bridgecorp's managing director Rod Petricevic and its former financial controller Rob Roest have been declared bankrupt and are exempt from proceedings.

THE BRIDGECORP FIVE

*Rod Petricevic and Rob Roest were found guilty at trial for misleading investors and were each sentenced to 6 years in prison.

*Peter Steigrad was found guilty at trial and sentenced to nine months of home detention, 200 hours' community work and ordered to pay $350,000 reparation.

*Bruce Davidson, the chairman, pleaded guilty and was sentenced to nine months' home detention, 200 hours' community work and ordered to pay $500,000 reparation.

*Gary Urwin pleaded guilty and was sentenced to two years in prison.