Provident Capital threatened by receivers

by Mackenzie McCarty03 Jul 2012

Provident Capital has until 4pm today to consider an appeal against a Court order made last week that would force the company into receivership based on a deficiency in assets.

Australian Executor Trustees (AET), the trustee for the group's fixed term debenture holders, applied in mid-June for the appointment of a receiver due to a potential deficiency in Provident's net tangible assets.

AET feared that the group was putting investor equity at risk and was on the brink of insolvency.

The Federal Court ordered on Friday that receivers be appointed, though the presiding judge stayed the execution of the order until today, so that Provident had time to consider an appeal.

When contacted by Australian Broker Online, Provident Capital remained defiant.

"We have understood Australian Executor Trustees' principal concern was the potentially unequal treatment of debenture holders that may result if there is, in fact, a deficiency of net tangible assets," a statement from Provident Capital issued to Australian Broker reads.

"While we have been of the firm belief that we would be able to meet all of our obligations to debenture holders as and when they fall due, and have provided AET with a comprehensive and considered proposal to protect debenture holders’ interests, AET continued to press for the appointment of a receiver."

Questions over how an involvency may affect commissions  have so far gone unanswered.

News Limited reported yesterday that Provident Capital had raised $131m from 5,270 debentures, and had loaned the majority to risky property developers, some of whom have failed to pay interest.

The Daily Telegraph reported that in March, insolvency firm PPB had written a report commissioned by AET that alleged Provident Capital had breached its loan to value ratio.










  • by Kevy broker 3/07/2012 4:56:09 PM

    not surprised

  • by John C 3/07/2012 8:55:55 PM

    Provident has been a leader in innovative property loan products with each deal considered on their merits. Many customers would never have survived without the assistance of one of Provident's product. How about supplying some support that Provident will survive this hiccup and continue to provide balanced outside the square products to assist your clients. It would be devastating to lose another company and reduce the ability to assist your clients in the future when one of the more traditional lenders have not got the "balls" to provide a solution outside the norm. Micheal and the team, you have my unequivocal support through this testing time.

  • by Positive Broker 3/07/2012 11:04:24 PM

    Having been involved with a mortgage manager going under in the past I feel for the people that work there.