Bridgecorp receiver cuts $18.9m settlement deal

Bridgecorp founder Rod Petricevic, left and Robert Roest. Photo / NZPA - Nigel Marple

Three convicted Bridgecorp directors have reached a $18.9 million settlement with the failed finance company's receivers.

Bridgecorp's receivers, PwC, had filed a $320 million claim against directors Bruce Davidson, Peter Steigrad and Gary Urwin for alleged breach of duties, but have now settled that case.

It followed the July 2007 collapse of Bridgecorp, which at the time owed $459 million owing to 14,500 investors. The deal will let the receiver pay an interim distribution of 4 cents in the dollar, which is expected to be made in March, taking total recoveries to 12 cents in the dollar.

PwC had already pursued Bridgecorp's managing director Rod Petricevic and chief financial officer Rob Roest to bankruptcy.

The settlement involved insurers QBE, which the Bridgecorp board members had a Directors and Officers (D&O) liability policy with.

This policy had a limit of $20 million.

In announcing the $18.9 million settlement, receiver Colin McCloy said it "was a very good result".

"The contributions from Bridgecorp's insurers and the individual directors were negotiated on the basis of available assets, and taking into consideration the delays and cost of taking the matter to Court. This was the key factor in reaching a decision, along with balancing the time, costs and risks associated with ongoing litigation when compared to the certain outcome today," said McCloy.

As part of the deal between the directors and the receivers, the Financial Markets Authority - which had lined up its own civil claim against Bridgecorp's board members - will discontinue its proceedings.

FMA head of enforcement, Belinda Moffat, said the decision to discontinue these proceedings "were not taken lightly".

"We assessed the public interest in continuing with the claim, and after considering the personal financial position of the directors and the settlement sum achieved by the receivers, and the fact that FMA would not be able to achieve a greater recovery, it was clear that it would not have been an appropriate use of taxpayers' money to proceed," she said.

"Our claim would have gone after the same pool of funds that the receiver has reached a settlement on, so there was little, if any, money left to pursue.

"It was also our view that the custodial sentences handed down in the criminal trial had sent a very strong deterrence message to the market which continues to be felt today," Moffat said.

Urwin was jailed for two years after pleading guilty to 10 Securities Act charges for misleading investors.

Davidson pleaded guilty to similar charges and was sentenced in 2011 to nine months' home detention, 200 hours' community work and paid $500,000 in reparations.

Steigrad went to trial - with Petricevic and Roest - and was found guilty of six Securities Act charges and was sentenced to nine months of home detention, 200 hours of community work and pay $350,000 in reparations.

In the case, brought by the FMA, Petricevic and Roest were both jailed for six years' and six months.