St Kilda Finance payout drop likely

Investors in failed Dunedin boutique company St Kilda Finance have received $1.7 million in disbursements since its receivership in November 2008 - but for the second time have been told the overall payouts would be lower than indicated earlier.

A total $5.2 million is still owed to 336, mainly southern, secured investors representing 419 term deposits, after two payments last year in July and December worth $1.7 million - equating to a payout of 25.3c in the dollar so far.

Initial indications by receiver Stephen Tubbs, of BDO Spicers in Christchurch, was for a payout in the range of 45c-80c in the dollar payout, which was then downgraded to the lower end of that range, and subsequently downgraded in January to a range of 40c-63c in the dollar.

"The gross value of the loan book, excluding interest earned, equates to $7.5 million, a reduction of $2 million since appointment [in November 2008]. A balance of $5.2 million remains outstanding to investors," Mr Tubbs said in the second six-monthly update filed with the Companies Office in late-January.

All Purpose Finance, trading as St Kilda Finance, was placed in the hands of receivers in mid-November 2008 by its directors, owing almost $6.93 million to its investors. Its loan book, with lending of $9.6 million, was largely secured by second mortgages over property to New Zealand borrowers.

St Kilda was the victim alongside numerous finance companies which either failed or were placed in moratorium during the previous two and a-half years at the time.

Risk-averse investors shied away and reinvestment rates in St Kilda plummeted from 65% to 15%. Mr Tubbs said the specialist nature of the St Kilda assets secured - it being a second mortgagee financier lending to development and specialist commercial property industries - saw the value of those asset values diminish, alongside its ranking as second mortgage holder, as opposed to first.

In the case of bankrupted guarantors or borrowers, the Official Assignee is now selling any assets, determining liabilities, and "investigating any transfer of assets by the debtor prior to bankruptcy", Mr Tubbs said.

St Kilda's fixed assets had been sold, the receivers held $358,500 in cash at January and 17 loans, largely secured by second mortgages, totalled $7.6 million, including interest and penalties. He gave no time-frame for another distribution.

- simon.hartley@odt.co.nz