FMA to drop Bridgecorp case
Bridgecorp investors are likely to receive a small payout next month after the Financial Markets Authority agreed to an $18.9 million settlement between the receiver, insurers and Bridgecorp directors.
However, investors are still owed 88c in the dollar.
Finance company Bridgecorp collapsed in 2007 owing 14,500 investors about $459m
Colin McCloy of receiver PricewaterhouseCoopers said a distribution of 4c in the dollar was likely in April. That was in addition to an 8c in the dollar payment already made, meaning that secured debenture investors to date would recover 12c in the dollar or $55m.
It was a small portion of the overall loss but the settlement was still a good result, enabling a distribution to be made "considerably sooner than would have otherwise been the case", McCloy said.
The key factors in the decision to settle were the amount of assets available, the delays and the costs of the FMA taking its civil case further, he said.
FMA head of enforcement Belinda Moffat, said the decision to drop its civil case was not taken lightly, but the fact was that the FMA would not be able to achieve a greater recovery.
"Our claim would have gone after the same pool of funds that the receiver has reached a settlement on, so there was little, if any, money left to pursue," Moffat said.
The FMA also felt that it had sent a strong message of deterrence through the criminal case which it and the Serious Fraud Office had taken the directors for making false statements in the company's prospectus and investment statements.
Former managing director Rob Petricevic and former director Rob Roest faced extra charges under the Crimes and Companies acts, and were each sentenced to six and a half years' jail.
Another director, Gary Urwin, received a two year sentence, and Bruce Davidson and Peter Steigrad received nine months' home detention, community work and reparation orders of $500,000 and $350,000 respectively.
Today's settlement related to civil claims that the directors had breached their duties under the Companies Act.
After nearly seven years of working on the Bridgecorp case, McCloy said there were just a few loose ends to tie up, including ongoing litigation that he was not in a position to discuss.
A final but modest distribution would be paid at the end of the receivership process, he said.