Key Points:

Nathans Finance director John Hotchin and two of his co-directors have appeared in the Auckland District Court this morning on criminal charges relating to the failed finance company.

Hotchin - the brother of Hanover Finance founder Mark - faces three charges under the Securities Act.

His co-directors, Donald Young and Kenneth Moses (known as Roger) face six charges each.

Proceedings have also been filed against a fourth director believed to be in Australia, but the authorities have not been able to locate the man yet to serve him.

Nathans Finance went into receivership in August 2007 owing $174 million to 7,000 investors.

So far just 2.5 cents in the dollar has been repaid.

The Securities Commission alleges the directors made untrue statements in the company's December 2006 registered prospectus and investment statement.

It says they claimed Nathans had no bad debts, that it had adequate liquidity, its lending was diversified, and that it made loans and managed them in accordance with robust policies.

Paul Davison QC, appearing for Kenneth Moses, said his client denied the charges.

The Serious Fraud Office is also conducting an investigation into Nathans, following a complaint by the company's receivers PricewaterhouseCoopers.

The SFO says Nathans' largest debtor is its parent, vending machine company VTL which is also in receivership.

VTL's receivers said this week that there was likely to be a "significant shortfall" in the repayment of the $112 million the company owes Nathans.