Capital + Merchant Finance's out-of-pocket investors finally have some good news seven years after its collapse with the company's liquidator today announcing a $18.5 million settlement with the failed firm's auditors.
The finance company collapsed in 2007 owing $167 million to about 7500 investors and previously no funds were expected to be recovered.
But the liquidator of Capital + Merchant Finance today announced it had reached an $18.5 million out-of-court settlement with the company's former auditors.
A Ministry of Business, Innovation and Employment spokesperson could not immediately say when investors could expect a pay-out and what the process for it would be.
The Official Assignee acting as liquidator of Capital + Merchant Finance, had filed a claim at the Auckland High Court against auditor BDO Spicers for negligence and failure in its role of auditing the company's financial statements.
But today the Insolvency and Trustee Service announced a full and final settlement of all claims between the liquidator and BDO Spicers. The $18.5m settlement was made without any admission of liability on BDO Spicers part.
Les Currie, Official Assignee at Hamilton and liquidator of the failed finance company said the settlement was reached after "assessment of the risks and benefits of litigation and the associated costs".
"This milestone represents a significant settlement in this matter for the ultimate benefit of the investors in the company - several thousand public investors who purchased secured debenture notes. It was achieved after rigorous negotiations and consultation. My team of insolvency personnel, experts, and legal counsel have all worked diligently to ensure the best possible outcome for the company and its investors," Currie said.
Two jailed Capital+Merchant directors are serving the longest jail terms given to failed finance company bosses to date.
Wayne Douglas and Neal Nicholls, the founding directors and beneficial owners of Capital+Merchant Finance, were found guilty in July 2012 of three charges of theft by a person in a special relationship.
In a case brought by the Serious Fraud Office, both men were each jailed for seven and a half years - the lengthiest sentence handed out in these types of cases so far.
In separate proceedings brought by the Financial Markets Authority, Douglas and Nicholls pleaded guilty earlier to Securities Act charges concerning misstatements in Capital + Merchant offer documents.
Nicholls total sentence for both sets of charges was 8 and a half years.
In Douglas' case, the total sentence is 8 years 2 months in jail.
Former C +M director and chief executive Owen Tallentire sentenced to six years in jail.