Mascot Finance investors who are eligible under the Government's deposit guarantee scheme will receive 100% of their money bank, according to the Treasury.
The finance company was placed in receivership on Monday and all repayments to investors have been frozen.
Mascot Finance owes 2557 investors about $70 million.
Mascot's trustee, Perpetual, called in the receivers when it became clear a loan on a Queenstown commercial property development would not be repaid. Mascot's board says writing the loan off would put it in breach of its trust deed.
The company reported a loss of more than $7 million last year and stopped taking deposits in September.
It signed up to the Government's deposit guarantee scheme and is the first financial institution to trigger the guarantee since the scheme was established in October last year.
The Treasury says based on the indications at the time, there was no reason to decline Mascot Finance's application.
The Treasury's Secretary, John Whitehead, says the guarantee only applied to deposits when Mascot registered. The Treasury looked at the situation at the time and Mascot Finance was in accord with its trustees.
Mr Whitehead says the Treasury hopes to pay out deposits to eligible investors as soon as is practically possible.
However, he says under the scheme, financial institutions and non-New Zealand citizens are not eligible for payouts.
Eligible investors will be able to fill out a form downloaded from the Treasury website.
Mr Whitehead says though Mascot's receivership is a concern, New Zealand's financial sector remains sound.