Bridgecorp Placed in Receivership
July 3rd, 2007Via: Stuff:
The collapse of one of the country’s major property financiers Bridgecorp – the fourth finance company to go to the wall in a year – could be one of the biggest to affect mum and dad investors since Equiticorp went bust in 1988.
Bridgecorp and its subsidiaries were placed in receivership at the request of its directors after defaulting on loan repayments five days ago, breaching terms of its trust deed.
The company raises money from the public and lends it to property developers who have generally failed to get funding from banks.
Bridgecorp claims it is the second-largest property development and commercial finance company in New Zealand by asset size, and the seventh-largest finance company overall.
Posted in Economy | Top Of Page
If this doesn’t signal The. End. of the NZ property bubble, I don’t know what will.
And another thing, this article–in one half of NZ’s newspaper duopoly, Fairfax New Zealand Limited–is a scam in itself. The whole finance sector has known that Bridgecorp was toxic for a year. They wouldn’t touch it with a bargepole. But funnily enough, the print media have been making a mint from publishing their ads all this time, inviting Mum and Dad to hand over their cash in exchange for 9% p.a. interest rates. The article starts off by saying Bridgecorp defaulted on loans. This is not true, they failed to repay retail debenture holders and the like. And it also fails to mention that unlike a conventional finance company, these guys took direct exposure in property development, not just through loans to developers.
Until Sunday, both newspaper companies were raking in the ad fees, so they were happy to keep quiet the dodgy state of this company. Scam artists.
The numbers I saw in this story and another one I was reading today had $500m invested by 18,000 people – making an average of over $27k per person. Given that most of the investors are probably families saving for retirement this is going to hit them hard. One article reckoned that the secured debenture holders would see 75c to the dollar back; unsecured investors would lose the lot.
I wonder how many of the Kiwisaver-approved funds would invest in this kind of thing?
If you’re going to stay in NZD:
http://www.raboplus.co.nz/
It’s the only AAA rated bank in NZ and one year term accounts pay 8.45% with a NZ$1000 minimum. Or 7.75% on call, no minimum.
Stay in NZD???
You’re joking, right? 🙂