Boston Finance in receivership

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Boston Finance has been placed in receivership, ending a moratorium arrangement in place since March 2008.

At the time of the moratorium, 1300 investors had about $38.5 million invested in Boston Finance.

Since then, $14.24m had been repaid to investors equating to a return of 37c in the dollar. That included a distribution of $2.3m to be made now, a statement issued today said.

The statement was from Boston Finance, its trustee Perpetual Trust and KordaMentha, which is dealing with the receivership and was moratorium manager.

There were eight loans to be recovered with a book value net of provisions of $15.85m. A substantial portion of the dollar value of those eight loans was subject to High Court litigation so it was too difficult to accurately estimate timing and recovery quantum.

Today's statement said Perpetual Trust had appointed Grant Graham and Brendon Gibson of KordaMentha as receivers of Boston Finance, which is a wholly owned subsidiary of the Australian Octaviar group, formerly MFS, which is in liquidation.

After consultation with the directors and KordaMentha, as moratorium manager, and after reviewing and examining available options, Perpetual Trust had decided receivership was the most appropriate course of action, the statement said.

The view of both the trustee and directors of Boston Finance was that seeking an extension to the moratorium would have resulted in a costly process for investors, with little or no benefit to them.

Despite the challenging economic environment, the moratorium had enabled the directors to use their knowledge of the company to maximise recovery of 24 of the original 32 loans and put a strategy in place to maximise the recovery of the remaining eight loans, the statement said.

Up to this point, the trustee, KordaMentha and the directors of Boston Finance had considered a moratorium had been more beneficial than a receivership.

Perpetual Trust head of corporate trust Matthew Lancaster said receivership was now the most effective and efficient option.

"While a moratorium was the appropriate course of action in 2008, investors' interests will now be best served by a receivership," he said.

"We are confident that the loan recovery process is now at a stage where a professional receiver can best maximise recoveries of remaining assets."

NZPA