Provident Capital's creditors vote to liquidate

Jonathan ChancellorOctober 24, 2012

As two properties within the portfolio are under offer, Provident Capital's creditors have voted to liquidate the $130 million subprime lender, rejecting the proposal of its directors to continue via a deed of company arrangement.

The court appointed administrators were sought by Australian Executor Trustees Limited (AET) in July this year following concerns raised with the Federal Court by AET that there was a deficiency in net tangible assets available to meet the claims of debenture holders.

AET indicated it did not support the deed of arrangement proposal on the basis that it was not in the best interests of debenture holders.

The Australian newspaper said Provident's receivers, PPB Advisory, were likely investigate the actions of directors in the lead-up to the collapse.

Its focus will be on why the group appeared to have failed to report tens of millions of dollars in paper losses.

It's also said to look at why Provident didn't sell more than $50 million worth of properties it has repossessed to recoup some of those losses nor apparently mark down the values on those properties as values declined.

Provident collapsed with over 90% of loans by value totalling around $100 million in arrears.

As at September 30, 2012, 95% of the loan portfolio by value was comprised of non-performing loans to borrowers.

The court-appointed administrators were sought by Australian Executor Trustees Limited (AET) in July this year. 

They are currently in possession of 18 loans, after taking possession of a further two loans in September.

The receivers are in the process of making an application to the Federal Court of Australia in order to seek clarification in respect of  aspects of the trust deed in relation to the mechanics of convening formal meetings and making distributions to debenture holders.

Jonathan Chancellor

Jonathan Chancellor is one of Australia's most respected property journalists, having been at the top of the game since the early 1980s. Jonathan co-founded the property industry website Property Observer and has written for national and international publications.

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