St Kilda investors left to absorb $4.76m shortfall

The six-year receivership of boutique St Kilda Finance has drawn to a close, ultimately leaving 336 southern investors $4.76 million out of pocket.

All Purpose Finance, which traded as St Kilda Finance, was placed in the hands of receivers in mid-November 2008 by its directors, owing almost $6.93 million to the mainly southern investors.

Receivers BDO yesterday announced the end of the six-year receivership, with joint receiver and manager Colin Gower saying the receivership was ''concluded'', on October 29.

''There are 336 investors, who have received distributions of $2.25 million to date with a remaining debt as at the date of this report of $4.76 million,'' Mr Gower said.

The distribution of $2.25 million, on about $7 million owed, represents a return to investors of just 32c in the dollar, falling short of even the bottom end of earlier payout estimates.

St Kilda was headed by Dunedin businessman John Farry, as chairman, and its loan book carried total lending of $9.6 million in 2008, which was largely secured by second mortgages over property to New Zealand borrowers.

However, St Kilda Finance suffered the same fate as dozens of other finance companies during a two-year period of the worst of the global financial crisis.

At the time investors became risk-averse and reinvestment rates plunged, with St Kilda's rates having plummeted from 65% to 15%.

Mr Farry has said in the past the company began winding down operations late in 2007, and initially, this had progressed well.

However, when the global financial crisis tightened its grip on the economy, and the credit squeeze grew, Mr Farry said the value of land and building as security diminished.

St Kilda Finance stopped taking investments in mid-2008, as the reinvestment levels plummeted to 15%.

In BDO's statement of realisations and distribution yesterday, there were debtor receipts for $2.55 million and sale of plant and equipment for almost $190,000, plus sundries which all totalled $2.75 million.

In payments made during the receivership, they included the $2.25 million to investors, plus a further more than $1 million, which included almost $250,000 in legal fees and more than $300,000 in receivers' remuneration.

PAYE was $41,000 and wages and salaries $85,000.

At the outset of the receivership, BDO had estimated a possible pay-out range of 45c-80c in the dollar, but expectations were repeatedly downgraded and by mid-2010 the range had been slashed to just 35c-36c in the dollar.

• In September 2011, St Kilda was one of six finance companies dropped from investigations by the Financial Markets Authority, which believes no laws were broken before their respective collapses.

The other five companies were Geneva Finance, Mascot Finance, Strata Finance, Direct Property Investments (No 6) and Finance & Leasing.

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