Geneva Finance on Monday defaulted on the redemption of debenture payments due on Monday and is now seeking a "moratorium" on further payments.
The company will seek support from around 4500 investors at a meeting in three weeks to defer redemptions for more than six months. Geneva will still pay interest over this period. It is no longer taking deposits.
Geneva will continue lending (mainly to finance car purchases).
NZPA reported that Geneva is owned by Finance Investments Holdings, which in turn is half owned by three prominent Auckland property developers, Peter Francis, Gary Hitchcock and Nigel Burton. The three own preference shares equivalent to 35 percent of the total shareholding.
KPMG's survey of financial institutions said Geneva had NZ$141 million in assets. HBOS is the major institutional creditor, owed NZ$50 million.
Chief executive Shaun Riley told the
New Zealand Herald that "there's been an erosion of confidence across the sector that, coupled with Standard & Poor's announcements [lowering credit ratings in recent weeks], has had an impact on us."