Bank saga nears end

Press, 20 October 1987, Page 12

Bank saga nears end

Eleven years ago the business and commercial community in New Zealand was stunned by the news that the Securitibank group of companies was broke. Thousands of small and corporate investors were owed millions of dollars. The Securitibank group had assets in downtown Auckland property and the like, but the high-flying merchant bank and finance group was out of business. Few people would have guessed in December, 1976, that it would take 11 years to sort out the mess; even fewer would have dared hope — as details of more than $5O million in debts unfolded — that all creditors would get their money back, and at least some token interest besides. This is what has happened. A final payout to nearly 5000 unsecured creditors will be made this month. The payment will be, in effect, interest on the $31.3 million proven debts that have already been repaid. The money is coming from surplus funds after all debts owed by the group have been met. Secured and preferential creditors have already been paid in full the more than $2O million they were owed and also received interest to the date of repayment. In the case of the unsecured creditors, interest will be 8.5

per cent — hardly compensation for loss of interest or for inflation since the company collapsed, and certainly nothing compared to what they might have hoped for when they first invested in the group, but at one time the picture looked much bleaker. The present pass has been reached only by an arduous and complex route. Acting for the group’s creditors, the liquidator, Mr Harold Goodman, has had to persevere with several court actions, notable for breaking new ground in New Zealand, and untangle a web of dealings, contracts, and investments that — even without the inter-company debts — made the Securitibank collapse the biggest banking and finance-house collapse in New Zealand. The experience has been salutary. Small investors who entrusted their life’s savings with the group, and who have suffered as a result, probably are entitled to feel aggrieved, but they must acknowledge that a good deal has been salvaged from the ashes on their behalf. If the business and ; commercial community has learned by the experience, some further profit can be gained from a company failure that seemed at the time little short of catastrophic