National Finance investors lose at least 50pc

Investors holding secured debenture stock in failed finance company National Finance 2000 will receive between 30 and 50 per cent of their money back, while investors in unsecured investments will receive nothing.

Receiver Colin McCloy, of PricewaterhouseCoopers, said he would refer the collapse to the "relevant Government authorities" for investigation.

He said analysis of National Finance's loan book had identified "a significant proportion of loans that were in arrears or unlikely to be recovered".

"Regretfully, we've had to inform investors that preliminary estimates show National Finance's assets are insufficient to meet its secured liabilities. The upshot is that secured debenture stock holders are only likely to recover between 30 per cent and 50 per cent of their investment."

Investors in National Finance's subordinated or unsecured investment products would receive nothing. McCloy estimated the company had issued about $4 million in subordinated notes.

National Finance and its related car dealership, Payless Cars, were placed in receivership last month owing $25.5 million to 2025 investors.

Excluding the $4 million owed in subordinated notes, a 30 per cent payout would represent a shortfall of about $15 million.

National Finance and Payless Cars were headed by high-profile businessman Allan Ludlow, who touted for investor's funds in television commercials even as the companies were struggling.

National Finance had made loans totalling $27.3 million to 3765 individuals or companies.

McCloy said: "Analysis has identified that a significant proportion are in arrears or are unlikely to be recoverable." He said the low level of likely recovery for investors had led he and National Finance's trustee, Covenant Trustee Co, to refer the receivership "to relevant Government authorities for their investigation".

McCloy would not elaborate on which authorities those are but it is likely they could include the Companies Office, the Police or the Serious Fraud Office.

He said PricewaterhouseCoopers appreciated that the level and timing of returns would come as a shock to many investors.

In a letter to investors, he said the timing of any payout was difficult to assess at this stage.

"It is highly likely that any returns to investors will be paid out over time as loans are recovered as opposed to a lump-sum payout. As a result, it would be prudent for investors to assume that they will not obtain any recoveries in the short term."

Cambridge resident Peter O'Sullivan, who had invested $8000 with National Finance 2000, said he was "startled" to find out how little of his money would be returned.