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First financial institution eligible for NZ bailout

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Lovelee
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« on: March 02, 2009, 12:30:32 pm »

Taxpayers will come to the aid of investors owed $70 million by South-island-based Mascot Finance, which collapsed today.

Mascot is the first institution covered by the Crown's deposit guarantee scheme to fail.

Treasury secretary John Whitehead confirmed in a statement that "all eligible" Mascot investors would get 100 per cent of the money they were entitled to under the guarantee scheme, which was put in place in October in the midst of the global financial market meltdown.

"The Treasury will aim to pay out guaranteed deposits as soon as is practically possible," he said.

The receivership came after a review of impairments in the Mascot loan book concluded that a "major" loan was unlikely to be recovered in full. A writedown in the value of that loan would have resulted in a breach of the trust deed, so receivership was chosen.

Mascot has been struggling since last year.

A statement from Mascot's trustee Perpetual Trust said that the 2558 debenture holders were affected.

"The receivers and the trustee will be working closely with Mascot management and staff to ensure that in these difficult times the best outcome is achieved for all interested parties," the statement said.

Deloitte partners Brett Chambers and Paul Munro have been appointed receivers.

Whitehead said that deposits covered by the guarantee included the principal sum deposited along with interest accruing. Deposit's made and interest earned both before and after Mascot entered into the deposit guarantee scheme are covered.

http://www.stuff.co.nz/4865497a13.html?source=RSStopstories_20090302
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Calliope
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« Reply #1 on: March 02, 2009, 12:33:15 pm »

wow what a great idea. Start a finance company, get it covered by the Crown's deposit guarantee scheme and then milk it to death. The investors will be protected and you will have a nice tidy little nest egg while the Taxpayer foots the bill
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