Fears of broader rout as finance company collapses

Thousands of "Mum and Dad" investors are facing losses amounting to several million dollars following the collapse of used car dealer Allan Ludlow's finance company.

National Finance 2000 went into receivership last night after failing to meet asset-to-debt ratios, the Independent newspaper reported today.

It is the first major finance company to collapse in recent years and has re-ignited fears of a broader rout in a sector weighed down by debt following several years of strong economic growth.

Accounting firm KPMG last week warned of a pending shake-out in the finance lending industry in its annual survey of financial institutions.

KPMG said the slowing economy and slowing property market was likely to lead to loan defaults, with new entrants - some operating on margins of less than 4 per cent - at the greatest risk in an economic downturn.

Mr Ludlow, National Finance 2000's high-profile managing director , last night shouldered the blame for the company's collapse.

"I did the absolute best and I believed I had a business model that has a lot of benefit," he told the Independent.

"I will work closely with the receivers to get the maximum amount of money back for investors."

Mr Ludlow made regular television appearances advertising National Finance 2000 and its associated car business, Payless Cars -- an importer of cheap Japanese cars.

The company's trustee, Covenant Trustee Company, has appointed John Waller and Colin McCloy of accounting firm Pricewaterhouse Coopers as receivers.

This is the second finance company to collapse under Mr Ludlow's leadership. His first company, National Finance, fell over in 1999.

- NZPA