Frequently Asked Questions

When did South Canterbury Finance go into receivership?

On 31 August 2010, Kerryn Downey and William Black were appointed receivers and managers of South Canterbury Finance Limited and its subsidiaries in the Charging Group (together “the SCF Group”).

 

Which companies have receivers and managers been appointed to?

The receivers and managers have been appointed to South Canterbury Finance Limited and its subsidiaries. Those subsidiaries are: Belfast Park Limited, Braebrook Properties Limited, Face Finance Limited, Fairfield Finance Limited, Flexi Lease Limited, Galway Park Limited, Helicopter Nominees Limited, Hornchurch Limited, Rental Cars Limited, SCFG Systems Limited, Sophia Investments Limited, Southbury Insurance Limited and Tyrone Estates Limited.

 

Why did SCF have to go into receivership?

Trustees Executors Limited (“the Trustee”) had previously agreed that South Canterbury Finance had to have completed a recapitalisation of the company on or before 31 August 2010. SCF was unable to achieve this by 31 August 2010 and as a result of this the directors of South Canterbury Finance Limited asked the Trustee to appoint receivers.

The Trustee concluded it was in the best interest of debenture holders that a receiver be appointed.

 

When or why is an organisation put into receivership?

If a company is in financial difficulty, a secured creditor may put the company into receivership. A secured creditor is someone who has a “charge” such as a mortgage or a general security agreement over some or all of the company’s assets to secure a debt owed by the company. Lenders usually require a charge over company assets when they provide a loan or other financial facilities to the company. A company goes into receivership when a receiver is appointed by a secured creditor to take control of some, or all, of the company’s assets. The powers and duties of the receiver are set out in the specific security agreement and the Receiverships Act 1993.

 

What is the receiver’s role?

The receiver’s role is to:

• collect and sell the charged assets to repay the debt owed to the secured creditor (this may include selling assets or the company’s business or both).
  
• pay out the funds realised from the assets in the order required by the law.
  

 

What is the difference between a liquidator and a receiver?

A receiver is usually appointed by a secured creditor. Once the secured creditor has been repaid, the receiver ceases to act. A liquidator is usually appointed by either a shareholders’ resolution or by the creditors through an application lodged with the High Court. A liquidator’s powers and duties are set out in the Companies Act 1993.

 

Is the SCF receivership connected to the statutory management of Aorangi Securities?

The appointment of receivers is completely separate. The statutory managers have no responsibility for any part of SCF and the receivers have no responsibility for any part of Aorangi.

 

Did placing some of Allan Hubbard’s business interests into statutory management cause SCF to fail?

No, the appointment of statutory managers to Aorangi Securities is completely separate to the appointment of receivers to SCF. The appointment of statutory management over some of Allan Hubbard’s business interests was made by the Minister of Commerce on the recommendation of the Securities Commission, whereas the appointment of receivers and managers to South Canterbury Finance was made by the Trustee, Trustees Executors Limited. The appointment of receivers is completely separate.  The statutory managers have no responsibility for any part of SCF and the receivers have no responsibility for any part of the statutory management of any of Allan Hubbard’s business interests.

 

Do you think investigations or any criminal charges are likely?

The Serious Fraud Office and other authorities have commenced investigations into certain business transactions and activities that occurred pre-receivership.  As these investigations are ongoing, we are unable to comment further.

 

Is this receivership different from other finance company receiverships?

The receivership of SCF is the largest and most complex receivership in New Zealand corporate history and is further complicated by the various official investigations underway. SCF is the only New Zealand finance company receivership where the company and its subsidiaries have continued to trade.

 

Were any offices closed or staff made redundant?

All SCF offices remain open and no staff were made redundant.

Will creditors get paid for money owed prior to the date of receivership?

In accordance with the Receiverships Act 1993, the receivers and managers are not liable for unsecured pre-appointment debts.

Should suppliers continue to trade with the receivers and managers?

The receivers and managers are committed to continuing the operations of South Canterbury Finance. They are liable for any purchases they make, as long as creditors have received a purchase order signed by the receivers and managers or their representative.

Will the terms and condition of my existing loan with SCF be affected by the receivership?

The terms and conditions of loans are not affected by the receivership. Borrowers should continue to make repayments as and when they fall due.

Is SCF taking new deposits from investors?

No new deposits were taken from the date of the receivership.

How much money was paid out to SCF investors under the Crown’s Retail Deposit Guarantee Scheme?

Approximately $1.6 billion.

How much money will the Government (taxpayer) get back?

Final realisations will depend on a number of factors, including the economic environment, the level of interest from purchasers and the length of time taken to complete sales.  At this time it is too early to determine the level of realisations with any level of accuracy. 

How long will the realisation process take?

Given the scale and complexity of SCF and related entities within the Charging Group, the realisation process could take anywhere from 12 to 36 months, or possibly longer.

How are the Receivers going to realise the assets of SCF?

The receivers have broadly categorised the SCF Group into the following four areas, each with its own tailored realisation strategy to reflect the diverse nature of the SCF Group portfolio.

1. Good Bank – This is the portfolio of performing loans.
   
2. Asset Management Unit – This is the portfolio of non-performing loans currently under asset management.
   
3. Investments – This includes wholly and partially-owned subsidiaries.
   
4. Related-party loans (including property investments).
   

What’s the plan with the ‘Good Bank’?

On 26 October 2010, Deutsche Bank AG, New Zealand branch, was appointed as sale adviser for SCF’s core finance business. The core finance business comprises the SCF branch network, subsidiaries such as FACE Finance and Southbury Insurance. Pre-sale due diligence for the core finance business (which includes ‘Good Bank’) will run into early 2011.

What’s the plan with the ‘Bad Bank’ – do you have a deadline to offload or write off?

It is the receivers’ intention to maximise realisations from the sale of ‘Bad Bank’, either through an “en bloc” sale to a purchaser or through a managed run-off by the receivers.

How’s the sales process going for major investments (Scales Corporation, Helicopters NZ and Dairy Holdings)?

On 22 October 2010, Goldman Sachs & Partners New Zealand Limited was appointed as sale adviser for SCF’s investments in Helicopters (N.Z.) Limited (HNZ), of which SCF owns 100%, and SCF’s majority shareholding in Scales Corporation Limited (Scales). Both HNZ and Scales are separate from the core finance business of the SCF Group. The sales of Scales Corporation and Helicopters NZ Limited are progressing according to plan. The receivers have reached an agreement with four other shareholders in Dairy Holdings Limited to jointly market for sale a combined 62.5% shareholding in the company. On 14 December 2010, the receivers announced the appointment of First NZ Capital to act with Murray & Company as joint sale advisers for the sale of the combined shareholding in Dairy Holdings Ltd.

When is the next statutory report available to the public?

The receiver’s first statutory report was published on the Companies Office website on 1 November 2010. The receiver will report biannually from that date, with the receiver’s second statutory report being due in early May 2011.

This information is intended for guidance purposes only and as a first point of reference. It should not be relied on as a substitute for professional advice. You may need to seek specialist legal advice for your particular circumstances.


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