All depositors and stockholders on South Canterbury Finance Ltd’s register of debt securities will be repaid by the Crown, Acting Secretary to The Treasury Gabriel Makhlouf said today.
The Trustee for South Canterbury Finance has appointed receivers to the company, which is a default triggering the Crown’s guarantee.
"Depositors and stockholders do not need to make a claim to The Treasury because the Trustee has made a claim on their behalf. All depositors and stockholders on South Canterbury Finance’s register will be repaid," Mr Makhlouf said.
"The Trustee has been nominated as the eligible creditor under the terms of the Guarantee and the Crown today paid the Trustee in full. The Treasury and the Trustee are cooperating to promptly repay all registered holders of South Canterbury Finance debt securities," Mr Makhlouf said.
"When an up-to-date register of debt security holders is available, the Crown and the Trustee will arrange prompt payment to everyone on the register. We expect an orderly and prompt payment to South Canterbury Finance depositors and stockholders," Mr Makhlouf said.
Because the Trustee has been nominated as the eligible creditor, some depositors and stockholders who may not have previously been repaid will now be repaid by the Crown. While this will incur an upfront cost, it is cheaper overall for the Crown because it facilitates immediate payout of depositors and avoids the need for the Crown to make future interest payments. Criteria relating to citizenship and tax residency do not apply and depositors and stockholders will not be assessed using those criteria. The criteria for being repaid is that you are on the South Canterbury Finance register of debt securities at the date of default. Ordinary shares and preference shares issued by South Canterbury Finance are not eligible for repayment. Debt securities eligible for repayment include: call deposits, term deposits, non-guaranteed deposits, debentures and bonds issued by South Canterbury Finance.
South Canterbury Finance is a Timaru based financial institution with around 35,000 depositors and approximately $1.6 billion in deposits.
"It is important to remember that the Crown guarantee is not designed to prevent a company from defaulting; it is designed to protect depositors and stockholders affected by a default," said Mr Makhlouf.
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