KEY POINTS:
The Australian arm of failed finance company Bridgecorp will join the New Zealand operation in liquidation, after creditors rejected a proposal to save the group by extracting more cash from the New Zealand arm.
Creditors of Bridgecorp's nine Australian companies met in Sydney yesterday to vote on a
proposal that would have seen Bridgecorp's Australian parent entity, Bridgecorp Holdings, transfer its entitlement to a stalled Fijian resort development to the New Zealand company Bridgecorp.
The New Zealand business, which went bust in July owing investors $430 million, is already owed more than $70 million by the Australian operation.
If the scheme had gone ahead, the failed New Zealand business would have paid Australian creditors between 5c and 10c in the dollar from profits on the Fijian project, and its claims against Bridgecorp Holdings would have been subordinated behind other creditors.
Bridgecorp's New Zealand receivers, Colin McCloy and John Waller of PricewaterhouseCoopers, said before the vote they were not prepared to make the payments to the Australian entity. McCloy told the Herald earlier this week that he did not believe the proposal would result in any benefit to Bridgecorp's New Zealand investors.
One of the Bridgecorp group's Australian administrators, Phil Carter, also of PricewaterhouseCoopers, said creditors had voted in accordance with the administrators' advice.
He and fellow administrator Stephen Longley had told creditors the best way forward would be to put the nine Australian companies into liquidation.
Carter said the affairs of the Bridgecorp group were "very complex".
With about $600 million in total assets, Bridgecorp's New Zealand arm was the largest of nine finance companies to collapse over the past two years. Receivers were appointed on July 2 after the company defaulted on repayments of some term investments due to investors.
The company's 14,500 secured debenture holders have been told they could receive as little as 25c for each dollar invested.
The collapse has put the spotlight on financial advisers, as some unhappy investors have asked why they were not warned about the risk they were taking.
The transtasman property finance company, headed by 80s high-flyer Rod Petricevic, loaned millions to high-risk property ventures, often taking the most hazardous portion of the loan.
Since liquidation, the company's receivers have found breaches of the company's trust deed as well as potential breaches of the Securities Act.
They have said it may take years to recover what they can on the company's loans.
Bridge collapses
* Bridgecorp's Australian creditors voted yesterday to liquidate Bridgecorp's Australian group of companies.
* The company's directors had tabled a plan to stave off liquidation that relied on a cash injection from the failed New Zealand arm of the business.
* Bridgecorp's New Zealand receivers refused to back the deal, saying it would not benefit investors here