SCF requests receivership

South Canterbury Finance has requested the company be put into receivership:

SCF announced this morning that it has been unable to complete a recapitalisation and restructure.

As a result, the Company would have been unable to certify to its trustee, Trustees Executors, in accordance with the terms of its debenture trust deed that it was compliant with various financial covenants under the debenture trust deed for the financial year ended 30 June 2010.

The trustee acts on behalf of more than 35,000 debenture holders with $1.2 billion of debentures invested in the big lender.

Accordingly, South Canterbury Finance Limited has requested Trustees Executors to appoint a
receiver in respect of the whole of its undertaking and assets, and Trustees Executors Limited has done

This is a sad end for what has been a flagship company which has been a sizeable lender in South Canterbury and beyond.

But there is no need to panic. Investors’ money is covered by the deposit guarantee scheme and the receivers will undertake an orderly sale of assets.

Much of the company’s money is tied up in mortgages on farmland. Forced sales of these would not only put SCF’s equity at risk it would have a very negative impact on farm values.


Finance English Bill English said the government moved swiftly to repay investors, reduce the cost to taxpayers and ensure minimal disruption to the wider economy:

“Ensuring all depositors in South Canterbury Finance get their deposits back as quickly as possible will ensure a minimum of disruption to the economy.

“While this will incur an upfront cost, it will ultimately reduce the cost to taxpayers by about $100 million by ensuring the Crown is not liable for interest payments after the date of settlement.

“Furthermore, being in control of the receivership process takes the pressure off the receiver to quickly sell any assets.

“This ensures the Crown can get the best deal for taxpayers. Businesses that owe money, or are owned by South Canterbury, can continue to operate and there will be a minimum of disruption to both the local and national economy.

“The up front cost to the Crown of repaying South Canterbury’s depositors is about $1.6 billion, but we would expect to recover the bulk of that as the receiver sells the assets over time.

“The final expected net cost to the Crown is already provided for in the Crown Accounts within the overall provision of about $900 million for all companies covered by the scheme,” Mr English says.

The $1.6 billion upfront is a huge amount but the ultimate cost to taxpayers will be considerably less than this.

Paying out now allows the repayment of deposits to be mdae quickly, minimises disruption to the wider economy and gives government control of the receivership process. The taxpayer should recoup most of the money after an orderly sale of assets.

8 Responses to SCF requests receivership

  1. Tired Farmer says:

    As that old song said ” Kiss me once and kiss me twice and kiss me once again its been a long, long time.” Bridge Corp, Hanover and now South Canterbury Finance—interesting times.

  2. Tired Farmer says:

    Sorry, Investors in BrigdeCorp are not covered so will have to add Strategic Finance etc in place of.

    Michael Cullen has certainly trapped John and Bill and may well have cost them the 2011 election already.

  3. Tired Farmer says:

    Will Fonterra’s first fortnightly Online auction 1st September bring good or bad news?

  4. homepaddock says:

    TF – I think this is a case where the government would be damned if they did and damned if they didn’t.

    As for Fonterra – one auction doesn’t an economic upturn make, but good news would be welcome.

  5. Adolf Fiinkensein says:

    Tired farmer, maybe it’s time for you to retire.

    This move has been a triumph for Bill English. 35,000 investors who will be thanking their lucky stars they didn’t go the way of Hanover’s victims and Allied Farmers.

    None of the SCF borrowers will be put to the sword immediately. Borrowers should thank their lucky stars there is an orderly receivership and not some messy continuation of the current inrernal debacle. Those who are viable will trade through and those who are not will be sold up. That’s life and they would have been sold up anyway, receivership or no receivership, for they should never have borrowed in the first place. It is because of bad loans that the company has failed. Never forget that.

    By the time we get to the next election, people will look back and thank Cullen (Did I say that?) for introducing the scheme and Bill English for extending it.

    When it’s all washed up in three or four years time it may well transpire that the cost to the tax payer is a big fat zero.

  6. gravedodger says:

    Great summation AF but your views will not be acceptable to the tabloids and the socialists even though the Govt involvement is right out of socialism 101.
    I broke with my normal behavior tonight and watched the tabloid tv and survived, as did the Plasma. Talk about shallow, populist and slanted, I am certain the stupid pricks had absolutely zero grasp on what had actually happened and poor them, they could not raise a tear anywhere.
    This is a very sad outcome but not entirely unexpected to me since Amy Adams MP, in response to my accusation of the commerce commission putting in statuary management on a sick old man when other slimeballs had not suffered a similar fate, gave me enough information that I would have had no idea how to find, to allow me to get a grasp of why.
    Your summation is to me the sort of information that a “journalist” would create as opposed to the inane crap being served up by the ignorant.

  7. Tired Farmer says:

    Good thoughts Adolf & Gravedodger.
    Guess we all have a lot to learn

    Cactus Kate is back with an interesting Article re SCF.

    Not long to we see the results of the !st fornightly Fonterra auction HP.

    Good weather down here at Gore at the moment so at least the lambs and calves are having no trouble finding a teat to suck on.

  8. gravedodger says:

    Expect an influx of politicians and bureaucrats then TF

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