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Thirteenth New Zealand finance company collapses

A run of collapses in the New Zealand financial investment sector continued on Thursday when Capital and Merchant Finance Limited was placed into receivership - the 13th company of its kind to fold in the last 18 months

The company collapsed owing about 200 million New Zealand dollars ($142 million) to 7,000 investors, news reports said. Fortress Credit Corporation (Australia) called in receivers, when Capital and Merchant Finance Ltd breached general security agreements. Receivers Tim Downes and Richard Simpson of chartered accountants Grant Thornton said it had predominantly lent funds for property development and commercial finance. They said that the ability of the company to attract new funds and retain existing investments had been significantly constrained by the current state of the debenture market. A recent report said that dubious lending practices and poor balance sheet management had resulted in the run of finance company failures which had affected 50,000 investors and 1.3 billion New Zealand dollars ($1 billion) in debenture deposits. (m&c.com)