McVitty Properties liquidation winds up leaving BNZ with $2.6M shortfall

The Reserve Bank said yesterday that 25pc of farmers are currently carrying debts above 65pc of the value of their assets and are under pressure in the face of weak dairy prices. Photo: Ross Setford.

McVitty Properties, one of two failed farm investment companies owned by Manawatu farmers Robert and Margaret McVitty, has completed its liquidation, leaving creditor Bank of New Zealand with a shortfall of about $2.6 million.

McVitty, which invested in dairy, dairy support, sheep and beef farms in the Manawatu and Hawkes Bay, was put into receivership in March 2010 when it was unable to make payments on debts including $43 million owed to BNZ.

Unsecured creditors are owed $151,780, according to the final liquidators' report from Richard Simpson and David Ruscoe of Grant Thornton.

Falling farm prices had further eroded the bank's security and McVitty was also guarantor for a number of related party debts including Patoka Dairies, which was put into receivership the same month, owing BNZ $40.2 million.

The McVittys held about 67 percent of Patoka, which owned six dairy or dairy support farms in Hawkes Bay and which is also in liquidation.

The receiverships came just months after the high-profile Crafar Farms were put into receivership in October 2009, owing Westpac Banking Corp, Rabobank and PGG Wrightson Finance some $200 million.

Like the Crafars, McVitty was controversial, being charged for obstructing an animal welfare officer in 2006 who was trying to prevent him shooting a cow.

However, the sale of McVitty and Patoka farms hasn't been controversial, and the selldown has allowed BNZ to recoup most of what it was owed.

The Reserve Bank said yesterday that 25 percent of farmers are currently carrying debts above 65 percent of the value of their assets and trading in negative equity, and they would be under pressure in the face of weak dairy prices.

"Another year of low prices, that would be a worry for the economy, no question, and also that would be a worry for farmers in terms of their debt capacity," governor Graeme Wheeler told a parliamentary hearing into the bank's six monthly financial stability report.