15 Jul 2010

Mutual Finance in receivership

3:41 pm on 15 July 2010

Another finance company has been put into receivership - the sixth to trigger the Government's retail deposit guarantee.

Auckland-based Mutual Finance was on Wednesday placed into receivership by its trustee, Covenant, which says it believes the finance company breached its minimum capital ratio, and receivership is in investors' best interests.

In a statement, Mutual managing director Paul Bublitz said there may have been a technical breach of its arrangements, but it was trying to address the issue, and the trustee has taken an extremely conservative view of the company's cash flows.

Mutual owes $9.3 million to 340 investors. About $8 million of deposits are covered by the Government's retail deposit guarantee.

Five other companies have triggered the guarantee: Viaduct Capital, Rockforte Finance, Vision Securities, Strata Finance, and Mascot Finance.

Government accounts released earlier this week show the Crown has set aside $934 million in case financial firms covered by the scheme go under and has increased the amount it has set aside for potential losses by $7 million to $887 million.