SCF Receivership – Some Initial Thoughts

Have not had time to assimilate all the comment, let alone conjecture flying about re SCF, but Bernard Hickey offers some commentary on what he thinks it means for the conomy in particular the dairy industry in the South Island.

His written piece is here.

I suspect argument over whether this would have happened if Allan Hubbard had stayed in charge is going to rage for a while. Hubbard appears to be stoking the fires a bit on this issue . Further, I suspect that some will for whatever reason see the demise of SCF as some sort of’ big end of town’ plot. Look forward to a raft of conspiracy theories.

Given my thoughts the other day on whether the government would grasp the political nettle on this issue, it is good to see that they have not attempted to prop the company up. Though there will no doubt be a lot of squeals of indignation from those who were investors in other failed finance companies.

Some (Initial) Thoughts:-

1.More importantly as the carcass is picked over I hope that an examination will be made so as to establish just what did go wrong.

2.It will be interesting to see what direction the receivers take and how agressive they are in collecting the debts due to SCF

3.Will there be a knock-on effect as other lenders to SCF borrowers, who may rank more highly as regards security seek to protect their position creating a spiral of receiverships and liquidations

4.Trustees Executors Ltd have called in the receivers at SCF request, but given that the NZ Government have paid some $1.7 billion over, who will actually be calling the shots in the receivership

5. Hubbard interests control or have loans it appears to some 90+ dairy farms, a number of which, it is speculated, are relatively highly geared conversions. If these have to be sold up :-

a) What will be the receivers attitude (and indeed the governments) if the highest bids are opportunistic ones from overseas investors, eg China?; when some $1.7 billion of taxpayer money has been used to recompense SCF depositors and NZ is borrowing $250 million from overseas lenders each week.

b) Will the majority of taxpayers be prepared to see lower bids from NZ interests accepted and thus effectively subsidised?;

c) Will they want the government to minimise the loss of taxpayer money?


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