KEY POINTS:
The word "moratorium" has a sombre ring to it. A little bit like "crematorium". Yet it probably has less negative associations than the word "receivership".
Geneva Finance this week said it would seek permission from its debenture holders for a moratorium, under which it would postpone the due date of all deposit repayments by six and a half months, as well as ceasing to take new money.
In other words, if your Geneva debentures would have matured in six months' time, they will mature in 12 and a half months' time instead - if investors accept the proposal by way of ballot on November 5.
Should investors reject the proposal, it seems likely the "R" word would be the next step, making it, what the 11th? the 12th? finance company to go under during the past 18 months. Stock Takes is losing count.
But with every indication that tally is likely to rise, will we see more of these arrangements as the industry attempts to minimise the damage to surviving firms' funding that occurs every time another firm bites the dust?
KPMG banking group partner Godfrey Boyce believes the outcome of the Geneva vote could set a precedent.
"If those debenture holders don't vote for the moratorium, then it creates a knock on effect," he says. Other firms in similar straits may find their own moratorium proposals fail to find support.
Geneva is not the first firm to go down the moratorium route. Beneficial Finance was granted an 18 month moratorium by investors some weeks ago.
