The first report out on failed Auckland-headquartered finance company FE Investments has forecast a shortfall on recovering all the loans which total $64.8 million.
KordaMentha's Neale Jackson and Brendon Gibson, joint receivers and managers of all the business, said the company had $54.6 million of depositors' funds.
Yet it had loaned $54.8m and not all that could be recovered.
"We are currently reviewing the realisable value of the company's assets, including the loan book. We expect recoveries will be lower than book value," they said.
• NZ finance company FE Investments in receivership, $53m deposits on the line
• Premium - FE Investments collapse: 'Too early' to say how much of $54.3m investors will get back
• Premium - Reserve Bank told on Tuesday of FE Investments' failure: $54.3m hangs in balance
• Family feud: Nobilo wine family scrambles to avoid mortgagee sale of boutique vineyard
The Herald reported in early April how the financier had gone into receivership, leaving deposit holders extremely worried.
The latest report quantified $73.1m assets: $64.8m in loans, $6.2m cash, $1.4m intangible assets and $700,000 fixed assets. Yet Jackson and Gibson also warned those numbers came from the company's records and had not been independently verified.
On the other side of the ledger, creditors or deposit holders are owed $54.8m, trade creditors are owed $309,000, employees $49,000 and Inland Revenue's amount it yet to be confirmed. Jackson and Gibson are waiting for IRD to finalise its preferential claim, if it has any.
People with money in FE Investments are desperate to hear how much they will get back - and when.
One worried depositor disclosed he had hundreds of thousands of dollars with FE Investments. The term deposit was due to expire and if all had gone according to plan, he would have got the money with interest. 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 in early April that 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.
Jackson and Gibson said in their first report that FEI was formed in 2003 and traded as a non-bank deposit taking finance company providing commercial loans and finance leases.
Before they were was appointed, attempts were being made to save the business by recapitalising the company, they noted.
That was unsuccessful and defaults occurred under the terms of the trust deed. So Trustees Executors appointed the receivers.
"The amount owed to deposit holders as at the date of receivership totalled $54.6m. As a consequence of the receivership, all payments of principal and interest to deposit holders were suspended," the latest report said.
The failure raised wider concerns.
Liam Mason, the Financial Markets Authority's director of regulation, said in April: "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 have been told to email or call KordaMentha to provide information.
FE Investment had loaned money on two big hotel projects:
• 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.