A receiver running an Auckland-headquartered financier with $54.3 million of investors' money says it's too early to say how much people will recover.
But KordaMentha's Neale Jackson has not entirely ruled out some payments in the longer term.
Jackson, joint receiver of FE Investments with Brendan Gibson, said he was unable to quantify the exact financial position of the business because the appointments were only made on Wednesday.
He anticipates some money might be recovered and repaid.
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"The history of finance company receiverships - the ones I've been involved in anyway - is that there's usually been some money coming back to people. But I can't say [how much]. It's too early to be determined but we will provide that information to people when we can," Jackson said.
The receivers will write to depositors initially telling of their appointment, then update them next month, Jackson said.
The Financial Markets Authority said yesterday FE Investments was a relatively small non-bank deposit-taking finance company with $54.3m in retail investments, the statement said.
Liam Mason, FMA director of regulation, said: "This is terrible news for the investors in this troubled non-bank deposit taker. FE Investments has been in difficulty for some time following a number of business setbacks. Its problems were not caused by Covid-19, but there's no doubt the current economic conditions have made matters worse."
Those with deposits could email or call KordaMentha to provide information.
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Accounts show the company had loaned money on two huge Auckland hotel projects. FE Investments, the ASX-listed business, gave details of that in its interim financial report for the half-year ended September 30, 2019.
But both projects seemed extremely slow to begin to be developed.
• 201 Hobson St (Hobson Project 201)
"The hotel development is a prospective 108-room four-star hotel located at 201 Hobson St, Auckland. Resource consent was issued in November 2017. Additionally, the company has received an offer of a fixed-price construction contract with a major NZ construction firm. The contract is expected to be signed in December 2019. Construction is expected to commence early 2020 and targeted be completed by December 2021," the company said.
• 29 Anzac Ave (A29 Holdings)
"The hotel development is a prospective 176-room four-star hotel located at 29 Anzac Ave, Auckland. Resource consent was issued in 2018. Discussions with an international hotel operator are in progress and a final agreement with that hotel operator expected imminently. Once the operator has been engaged, then final design will be completed.
Construction is assumed to commence late in quarter 1, 2020 and to be completed by December 2021," FE Investments told the ASX.
As of late last year, both the sites were cleared for development and FE Investments had loaned $49m on the properties, with those loans secured against the real estate titles, it said.
"The two hotel developments are in central Auckland and at the reporting date both are cleared sites ready for development," the accounts said.
"The loans are secured over these developments. The gross loans associated with the key Individuals, of which there are two borrowers per project, total $49m-$28m is offset by syndication to co-lenders on a non-recourse basis," the accounts said.
The worst-case scenario was even contemplated last year.
"If the hotel projects are not completed or commenced, there would be significant financial loss," FE Investments said.
One worried depositor said yesterday he had hundreds of thousands of dollars with FE Investments. The term deposit would soon expire but now he said he feared the worst.
"My main question is how much can I expect to get back but maybe there are some bigger questions for government," he said. Smaller finance companies deserved support, he said.
"I knew FEI were struggling," he said, referring to media coverage late last year.
"So I planned to reduce my exposure as soon as my term deposits expired. But that wasn't going to be until later this year and I guess Covid-19 was too much of a hit for them on top of their existing issues," he said.
One person close to the collapse said while the pandemic had not caused the problem, nor had it helped. Issues were building for some time before the pandemic and this week when receivers were called in.