South Canterbury Finance Limited

[Alex]

Does anybody know an accurate answer to the following question? - Do NZ laws allow appointing statutory managers when a finance company handles investors' funds in a manner conflicting with what's been agreed with, or promised to, the investors?

[Enumerate]

Does anybody know an accurate answer to the following question? - Do NZ laws allow appointing statutory managers when a finance company handles investors' funds in a manner conflicting with what's been agreed with, or promised to, the investors?

No, this is not sufficient.

The Law Commission's recommendations are:

* that statutory management should be preserved as a remedy of last resort to be used if:
1. the affairs of a corporation cannot adequately be dealt with by any other formal and collective insolvency regime; or
2. the public interest requires it to be used.
* To suggest that the maximum initial period of statutory management should be three months, but with power to extend for a further three months;
* To suggest that decisions to invoke statutory management should be made by the High Court, with provisions for notice of the hearing to be given, and reasons to be given;
* To suggest that a report be provided to creditors and shareholders within one month, with a meeting to be held in the second month to decide what action should be taken.

However, it seems it you are Simon Power - you can do whatever you damned well please.

[minimoke]

Some very strong appointments to key senior management positions, announced today. I doubt if people of this experience and calibre would be risking damage to their career paths if they thought they were joining a foundering ship. I find today's message from Sandy Maier most encouraging.

They look like just the sort of people SCF could do with - but perhaps six months ago would have been a better time to bring them in. I'm not so sure they are risking their career - SCF would certainly be a challenge. More of a challenge, and rewarding, rescuing someone than than maintaining or growing a bit of whatever you already you have. I'd imagine there are pretty hefty redundancy provisions and performance pay in their package to help neutralise the risk they are exposing themselves to - but with all the activity in the banking industry locally they can't go too far wrong over the next 12 months or so.

[minimoke]

It is now 3 weeks since the SFO took the unprecedented and as yet unjustified step of putting Allan Hubbard and his wife into Statutory Management.

I would have thought this would have been plenty of time to validate any strong implications of fraud. I would have thought some public statement would have been mandatory, by this time.

I'm trying to recall who else has been put into Stat Man.
There was Equiticorp and as we know Alan Hawkins ended up in jail. Unraveling Equiticorp was likened to doing a 100,000 piece jigsaw when you had a million pieces. 20 years later there will still bits in Stat Man.
Then there was the PSIS - no prosecutions there I think. 6 out of every 100 NZ'ers had an account with PSIS. That Stat Man lasted 8 years.

And now we have, on par (??), Aorangi Securities. Aorangi can't be just bad, it must be very very bad if these previous Stat Mans are anything to go by - especially when we consider how everyone else in the past 20 years has escaped such action. I wouldn't be expecting any news anytime soon.

[Enumerate]

I'm trying to recall who else has been put into Stat Man.

IMI Pacific Group Limited, Walakahai Pacific Corporation Limited, John Baylis and Willard Amaru in December 1999 and Max Resources Limited in 1998

[Beagle]

They look like just the sort of people SCF could do with - but perhaps six months ago would have been a better time to bring them in. I'm not so sure they are risking their career - SCF would certainly be a challenge. More of a challenge, and rewarding, rescuing someone than than maintaining or growing a bit of whatever you already you have. I'd imagine there are pretty hefty redundancy provisions and performance pay in their package to help neutralise the risk they are exposing themselves to - but with all the activity in the banking industry locally they can't go too far wrong over the next 12 months or so.

Okay, i'll be brave for my first post, many would be too scared to weigh-in on this relativly heavyweight subject straight off the bat. First as a newcomer, let me briefly introduce myself.
Late 40's, an Accountant in practice, former investor in SCF, investor in the sharemarket for over twenty years.

The new appointments look good, as were the director appointments some time ago. Unfortunatly there's little question the SM of Mr Hubbard's interests has cast a dark shadow over SCF's future.
One of the key issues is how can investment advisor's now recommend clients invest in SCF given the on-going investigation and the fact that there was allready a significant degree of uncertainty hanging over the company before the SM action ? Of course that probably won't stop Forsyth Barr from clipping the tiicket, but its probably best I don't go there...at this stage anyway, Credit Sails, Feltex, need I say more ?

In my opinion, the liklyhood of SCF climbing the wall of maturities within its own resources has diminshed considerably which appears to beg the question, perhaps the Government might provide temporary cash flow assistance to bridge the gap, "too big to fail"

This may be logical as they're in it good and proper if SCF fails anyway with the key question can the losses be stemmed or mitigated by continuation of trading ?

Regarding the preference shares, I've thought about this long and hard and my conclusion is its only for the very brave. Given they're at a margin of only 2.5% over swap they were issued at a time when margins for this type of security were very thin, its seems most unlikely they'll ever get close to a dollar again, even if the company survives post the Govt Guarantee period which I think is extremly unlikely. At 13 cents on the dollar today with a maximum apparent upside of about 60 cents, that's one chance in about seven..., isn't that just gambling ?

[minimoke]

Does anybody know an accurate answer to the following question? - Do NZ laws allow appointing statutory managers when a finance company handles investors' funds in a manner conflicting with what's been agreed with, or promised to, the investors?

Heres S39 of the Corporations (Investigation and Management) Act 1989

Grounds on which corporation can be declared to be subject to statutory management
The Securities Commission shall not make a recommendation under section 38 of this Act in respect of a corporation unless it is satisfied on reasonable grounds—
(a) That the corporation is, or may be, a corporation to which this Act applies; and
(b) That, in the case of a corporation that is, or may be, operating fraudulently or recklessly, it is desirable that the corporation be declared to be subject to statutory management for the purpose of—
(i) Limiting or preventing the risk of further deterioration of the financial affairs of the corporation; or
(ii) Limiting or preventing the carrying out, or the effects of, any fraudulent act or activity; or
(iii) Enabling the affairs of the corporation to be dealt with in a more orderly or expeditious way:
(c) That, in the case of a corporation referred to in section 4(b) of this Act, it is desirable that the corporation be declared to be subject to statutory management for the purpose of—
(i) Preserving the interests of its members or creditors or beneficiaries or the public interest; or
(ii) Enabling the affairs of the corporation to be dealt with in a more orderly or expeditious way.

Now tonights homework is: Name the companies that have met this criteria in the past 5 years.

[winner69]

So they got the guy who as a director of hanover seemed to have got a better deal for Hotchin et al than for the hangover investors .... good one

[COLIN]

Enumerate: You touch on a very salient point, i.e. in a civil society who should have the actual power to boot an individual into something as drastic and as freedom-depriving as Statutory Management? Should it be the Executive arm of Government or the judiciary? I would have thought the latter. Even a search warrant to rummage through my house requires the signature of a judge. As you so rightly point out, we like to pride ourselves that we are not in a police state - not yet, anyway. I, and others I know of, share your concern as to the disturbing nature of this whole development.

[COLIN]

IMI Pacific Group Limited, Walakahai Pacific Corporation Limited, John Baylis and Willard Amaru in December 1999 and Max Resources Limited in 1998

Does anyone remember the JBL Group, who I seem to recall were placed into Statutory Management away back in the 60's I think it was?
Shows how ancient I am.