27 Nov 2010

$178 million payout after property lender goes into receivership

4:20 am on 27 November 2010

A property lender was placed into receivership on Friday evening, triggering a $178 million payout to investors under the Government's extended retail deposit guarantee.

Equitable Group is one of seven lenders covered under the extended scheme, but is the first to go into receivership, resulting in a payout from the Government.

The Treasury says it will pay out the money to 6,000 investors who had money deposited with the company.

Equitable Group's chief executive Peter Thomas says the company placed itself into receivership due to continued deterioration in the commercial property sector.

Mr Thomas says the company was not confident of getting deposits to carry on business once the extended retail deposit guarantee expires at the end of 2011.

The extended guarantee replaced the intitial retail deposit guarantee, under which the Government paid $1.6 billion to investors in failed finance company South Canterbury Finance in August.