LDC Finance liquidators reach $3.8 million settlement

The allegations are laid out in a pre-trial decision on how a High Court lawsuit brought by LDC's investors and liquidators should be be run.

The liquidators of LDC Finance have reached a $3.8 million settlement with the firm's former directors, trustee and auditor.

Nelson-based LDC collapsed last decade owing 1000 investors about $20 million. While some got their money back, unsecured investors received nothing and are still owed more than $12.5 million. Secured investors are owed about $1.5 million in interest over-and-above what they have already got back.

Any further recovery had hinged on the outcome of court action brought by LDC's liquidators and a group of investors against the firm's former directors, trustee and auditor.

Some of the allegations in the case included that LDC was insolvent from the time it was set up and that its directors ran it "recklessly, incompetently and with disregard for the basic requirements of a finance company".

The allegations were denied and the case now won't see a courtroom after liquidators Iain Shephard and Heath Gair reached a settlement with the defendants.

The directors named in the proceeding were David Miller, Kevin Elliott, Christopher Hardiman and John Janetto. The firm's trustee was Perpetual Trust (which has since merged with Guardian Trust) and the auditor was accounting firm Sherwin Chan & Walshe.

Shephard and Gair on Friday said these defendants all contributed to the $3.8 million settlement which, after costs, will see eligible investors get a payout.

The precise terms of the settlement are confidential but Shephard believed the deal was the best outcome that the company's creditors could achieve in the circumstances.