The Government's bill for failed finance companies has passed $110 million after a fifth company was placed into receivership.
The trustee of Viaduct Capital, appointed receivers McDonald Vague at the request of the company on Thursday, triggering the Crown's deposit guarantee scheme.
Viaduct Capital owes $7.8 million to 110 investors
but only $7.3 million of it is covered under the scheme because Viaduct was dropped from the guarantee in April 2009.
Treasury director of financial operations Brian McCulloch said the Crown guarantee would not cover any deposits made with Viaduct after April 20, 2009.
McDonald Vague's Iain McLennan said it was too early to say what the prospects were for the 17 investors owed $500,000 who are not covered by the guarantee.
"It's very very early to be saying what their prospects are or to be able to put a number on it. We have got some more work to do looking at the value of the securities."
Trustee Colin Wilson of Prince and Partners Trustee Company said it appointed receivers to "protect the interests of investors through an orderly realisation of the company's assets".
McLennan said he understood the property finance company had been placed into receivership because it had been unable to make a payment to depositors on Thursday.
McCulloch said Treasury would contact eligible depositors in about six weeks with information on how to claim under the terms of the guarantee scheme.
"The Crown stands fully behind its guarantee commitments, and we expect an orderly process of payment to eligible Viaduct Capital depositors."
Treasury cut Viaduct from the guarantee scheme over concerns that Paul Bublitz's Hunter Capital Group (HCG) may have benefited from the guarantee in a manner unintended by the Crown.
HCG lent Viaduct shareholder Phoenix money to enable it to buy Viaduct.
It was reasonable to take the view that the transactions surrounding the purchase of Viaduct appeared to have been designed primarily to advance the interests of Bublitz, Treasury said.
Viaduct Capital was formerly known as Priority Finance. Former chief executive Nick Wevers, who stepped down in September, is a former chief executive of failed property investment firm Blue Chip.
Viaduct is the third finance company covered by the Government's deposit guarantee scheme to fail in the last six weeks. Rockforte Finance went into receivership last week and Vision Securities went under in May.
In the Government accounts for the nine months to March 31 the Crown put aside $881 million for expected losses on the scheme - up from $849 million in the nine months to February 28. The scheme is expected to claw back some money from the receiverships and also earns fees from those who join it.
In the year to June 20, 2009 the Government made $74 million in fees from the scheme and expected recoveries of $34 million.
FAILED COMPANIES
Defaults to date covered by the Government's deposit guarantee scheme
* Mascot Finance: $69.4m
* Vision Securities: $30m
* Viaduct Capital: $7.3m
* Rockforte Finance: $3.2m
* Strata: $300,000
* Total: $110.2m
The Government's bill for failed finance companies has passed $110 million after a fifth company was placed into receivership.
The trustee of Viaduct Capital, appointed receivers McDonald Vague at the request of the company on Thursday, triggering the Crown's deposit guarantee scheme.
Viaduct Capital owes $7.8 million to 110 investors
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