Media release

26 June 2014: 2.00pm

$18.5 million settlement for Capital + Merchant Finance

The Insolvency and Trustee Service (a business unit within the Ministry of Business Innovation and Employment) today announced it has successfully finalised a settlement agreement for $18.5 million.

The settlement represents a full and final settlement of all claims by the liquidator of Capital + Merchant Finance against BDO Spicers (the previous auditors) arising out of the audits of Capital + Merchant Finance's financial statements for the years ended 31 March 2006 and 31 March 2007. It is made without any admission of liability on the part of BDO Spicers.

Les Currie Official Assignee at Hamilton and liquidator of Capital + Merchant Finance Limited (In Receivership and In Liquidation) says the agreement with BDO Spicers settles a long standing civil claim as instigated by the liquidator. The settlement was reached after assessment of the risks and benefits of litigation and the associated costs.

“This milestone represents a significant settlement in this matter for the ultimate benefit of the investors in the company - several thousand public investors who purchased secured debenture notes”.

“It was achieved after rigorous negotiations and consultation. My team of insolvency personnel, experts, and legal counsel have all worked diligently to ensure the best possible outcome for the company and its investors,” says Mr Currie.

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Background:

Capital + Merchant Finance Limited was placed into receivership on 23 November 2007 with the appointment of Timothy Downes and Richard Simpson of Grant Thornton as Receivers. A second receivership also commenced on 29 November 2007 with the appointment of Grant Graham and Brendon Gibson of Korda Mentha as Receivers. The first receivership was concluded on 21 March

2012 and the second receivership continues. The Official Assignee was appointed liquidator of the company on 15 December 2009 on the petition of the Registrar of Companies.

Three former directors of C+M (Nicholls, Douglas and Tallentire) were convicted of offences under the Crimes Act and the Securities Act as a result of prosecutions by the Serious Fraud Office (SFO) and the Financial Markets Authority (FMA). They received total prison sentences of between six and eight and a half years’ imprisonment. Two of the directors (Ryan and Sutherland) were ordered to pay reparation totaling $160,000.

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