Otago investors caught up in the collapsed $91 million
Credit Sails investment fund are to get almost $16 million back
in coming weeks, from a $60 million settlement fund from the
five companies which created Credit Sails.
The 85c-in-the-dollar payout brings to an end almost four
years of behind-the-scenes negotiations, litigation threats
and an almost two-year investigation by the Commerce
However, entitlement to payments also includes investors
waiving their rights to any future legal action.
The companies which established the fund, and subsequently
reached the $60 million Commerce Commission settlement, were
Forsyth Barr Ltd of Dunedin, Forsyth Barr Group Ltd, Credit
Agricole Corporate and Investment Bank, Credit Sail Ltd and
Calyon Hong Kong Ltd.
Credit Sails appeared a low-risk investment offering 8.5%
interest income, but it was an extremely complicated
investment vehicle, based on sophisticated debt securities,
whose demise was prompted by the failure of Lehman Brothers,
in the US, and two banks in Iceland.
Following the 2008 collapse, the original $91.5 million
investment was later described by the Commerce Commission as
''worthless''. Some southern investors were understood to
have lost their capital including hospice, youth, orphan and
three religious trusts.
Greg Marshall, of Logic Fund Management in Wanaka, had signed
up more than 500 affected parties - representing almost 20%
of Credit Sails - to potentially take private legal action.
He said when contacted yesterday he was ''thrilled'' at both
the Commerce Commission's findings and its efforts now to
However, he was ''surprised'' the payment was not higher than
85c, considering there had been higher payouts from other,
separate and unrelated, diversified funds.
He maintained concerns about ''eligibility'' criteria for
some investors, which included those involved following
estate transfers after death, existing pre-payment errors and
securities which had been held in trust.
''This [eligibility] is the unanswered question at present
for some of those investors,'' Mr Marshall said.
There were ''several aspects'' of the offer which required
more scrutiny, Mr Marshall said.
The eligible Credit Sail investors will receive about $850
for every $1000 they lost. Potential payments range from
$132to $2.5 million. Commerce Commission chairman Dr Mark
Berry said yesterday more than 2550 investors would recover
about 85% of their lost capital, noting ''most of these
investors were elderly'' and having the money returned would
have a big impact on the quality of their lives.
''This is a substantial payout that will have a significant
impact in some communities,'' Dr Berry said in a statement.
For example, in Otago and Southland, investors would receive
just under $16 million, while others in the Auckland region
would get more than $10 million back, he said.
Others to benefit from the payout included charities and
community organisations, which collectively would get $4.6
million, he said.
The investors could expect to receive some mail around
Easter, outlining their eligibility for payment from the $60
million settlement fund, Dr Berry said.
Dr Berry cautioned investors that if they decided to accept
the offer, overseen by the Public Trust,
the settlement terms included they had to agree to release
the five companies or any other persons connected with Credit
Sails, from any legal liability.
''Investors who wish to accept the settlement payment cannot
also take legal proceedings,'' Dr Berry said.
The Commerce Commission had reached the view Credit Sails was
marketed and sold in a way that might have misled investors
under the Fair Trading Act, Dr Berry said.
The companies had ''strongly disagreed'' with the
commission's views, that there were grounds to bring
proceedings against the companies', and that any claim for
breach of the Fair Trading Act would be ''strenuously
defended'' by them, Dr Berry said.
''In the circumstances, the Commission decided that a better
outcome for investors would be produced through the prompt
creation of a voluntary scheme to compensate investors,'' he
Any Credit Sails investors whose eligibility for repayment is
questioned can contact Simon Hartley, in confidence, at
or direct dial (03) 479-3527.