Fairview New Zealand yesterday became the 19th finance company to fail in the past two years when it was placed into receivership along with FP Holdings.
In the past two years, more than $2 billion of investors' funds have been put at risk or lost by the finance industry collapses.
Perpetual Trustees Ltd initiated the receivership of Fairview (formerly Cymbis) and appointed Rod Pardington from Deloitte as receiver.
Fairview, part of the wider Capital+Merchant Finance group, owes $6.9 million to 797 stockholders.
"The demise of Capital+Merchant Finance at the end of last year meant that Fairview was unable to meet its interest payment commitments in December 2007," Perpetual chief executive Louise Edwards said in a statement.
On December 14, FP Holdings (FPH) purchased the assets of Fairview and assumed the liability to meet the principal and interest payments to Fairview's stockholders by way of a debt assumption deed.
The rationale behind the transaction was to prevent Fairview from being placed into receivership, and to try to ensure the stockholders did not suffer any loss, she said.
On purchasing the assets of Fairview and assuming its obligations, FPH was able to meet the December 2007 and March 2008 quarterly interest payments to all stockholders and attended to payment of other expenses, Ms Edwards said.
FPH invested about $1.4 million in its attempt to protect the stockholders of Fairview.
"Since FPH assumed the obligations of Fairview, there have been no debenture investments which have fallen due for repayment, nor any early repayments of investments made, so all investors have been treated equally in that time.
"It was FPH's intention to realise the acquired assets prior to the maturity dates of the stockholders' debentures in order to repay stockholders in full and on time."
However, in early May, FPH advised that it had been unable to realise the assets as originally contemplated and, as a consequence, there were insufficient funds to meet debenture maturities.
The failure to meet payments placed Fairview in breach of its trust deed, and FPH in breach of its debt assumption deed with Perpetual Trust.
With no prospect of the breach being remedied soon, both the trustee and FPH decided the best measure to protect the interests of all the investors, was to place both Fairview and FPH into receivership, Ms Edwards said.
