Five Bridgecorp directors -- Rod Petricevic, Rob Roest, Bruce Davidson, Gary Urwin and Peter Steigrad -- each face 10 charges brought under the criminal provisions of the Securities Act.
The maximum penalty is five years' jail or a $300,000 fine on each charge.
Bridgecorp collapsed into receivership in July 2007 owing 14,500 investors about $460 million.
It was already "in a freefall of deteriorating circumstances", when it issued its prospectus at the end of 2006, prosecutor Brian Dickey told the court.
It had been borrowing at interest rates higher than it was lending at, he said.
"The model by this point was profoundly uneconomic," Dickey said.
The charges against the five, brought by the Securities Commission, allege the directors lied in the December 2006 prospectus.
By early 2007, it began defaulting on its principal and interest repayments to investors. But when it applied to amend its prospectus in March 2007, there was no mention of that.
In five months it defaulted on 44 separate occasions to the tune of nearly $21m.
By May 2007 its bank balance was $16,000.
Staff were told to blame the lack of payment on a "banking glitch", the court was told.
Pleas will be entered at the end of the depositions.
The Companies Office has banned Petricevic and Roest from running any company in New Zealand for five years.
Petricevic was bankrupted last year.
