Mutual Finance in receivership

The New Zealand government's retail guarantee was triggered once again after a small finance company, Mutual Finance, was put under receivership by its trustees.

Around NZ$8 million in deposits from around 400 depositors are covered by the Crown guarantee, a statement from the Treasury said.

While most finance companies have struggled to raise deposits even for periods covered under the Crown guarantee, Mutual Finance's strong growth in deposits in the past seven months or so is surprising. From a total debenture stock of around $4.9 million including interest accrual in November 2009, the company's debentures stood around NZ$9.3 million, according to Covenant Trustee.

The decision to put the company under receivership stemmed from a view from Covenant that Mutual likely breached its minimum capital ratio and there were issues with the company's immediate cash flow leading up to the end of the guarantee period until October 12.

Mutual Finance came under new ownership earlier this year after a company associated with investor Paul Bublitz bought an 80 per cent stake in the company, and was set to buy the balance 20 per cent by October.

Bublitz founded Strategic Finance in 1999 and retired as the director after the company was bought by Allco. Bublitz was associated with Viaduct Capital which went into receivership in May.