Finance company covered by Govt guarantee defaults

Another finance company covered by the Government's retail deposit guarantee has defaulted.

It is Strata Finance Ltd, which had just 21 customers and deposits of $448,000 as of April 20.

All eligible depositors will get 100 per cent of the money they are entitled to under the Crown retail deposit guarantee scheme, Treasury Secretary John Whitehead said.

Strata was unable to pay one of its depositors on the maturity date of that deposit on April 16, which constituted a default. Strata has been in the process of winding down.

"The Crown stands fully behind its guarantee commitments, and we expect an orderly process of payment to eligible Strata Finance depositors," said Mr Whitehead.

The Crown retail deposit guarantee will not cover any new deposits or the roll-over of existing deposits after April 16.

The Crown will seek to recover the value of any payouts the Crown makes under the guarantee.

The guarantee scheme has been criticised for accepting finance companies on the brink of failure and for distorting investment flows.

- NZPA