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A further two finance companies associated with Five Star Consumer Finance have collapsed, owing investors almost $70 million.
The complex web of business arrangements around the group of companies, which is largely owned by directors Marcus Macdonald, Nicholas Kirk and Anthony Bowden, has now been referred to the Companies Office and Securities Commission, receivers dealing with the affair say.
Last week Five Star Debenture Nominee, which owes $42.6 million to unsecured depositors, was placed in liquidation by its shareholders MacDonald and Kirk.
Two days later Five Star Consumer Finance Pty and Five Star Rentals Pty, Australian companies associated with the New Zealand group, were placed in receivership owing A$22 million.
The Business Herald understands National Australia Bank is Five Star Consumer Finance Pty's main creditor.
Five Star Debenture Nominee acted as the debenture holder on behalf of unsecured depositors and appeared to lend all of the money it raised to Five Star Finance, a company owned by Kirk via Four Star Investments, liquidator Paul Sargison said in his first report. The Five Star Debenture Nominee creditors are understood be a relatively small number of private investors.
Five Star Finance was placed in receivership on September 5, a week after Five Star Consumer Finance (NZ) collapsed owing $63 million including $54.43 million to debenture holders.
Five Star Finance owes a total of $43.7 million to Five Star Debenture Nominee but its receiver Raymond Burgess has estimated eventual returns on that sum will be 22 per cent at best.
Including the sum owed to Five Star Debenture Nominee, Five Star Finance's total liabilities are $54.5 million with $3.65 million owed to Five Star Consumer Finance, which has already been written off by that company's receivers.
Five Star Consumer Finance's receivers Richard Agnew and Anthony Boswell of Pricewaterhouse-Coopers have told debenture holders that eventual payments may total as little as 26c in the dollar, which could take their losses to $40 million.
Agnew and Boswell have said the main reason for the shortfall in payouts was the amount of bad debts on Five Star Consumer Finance's $40.9 million commercial loan book, including "a large number of high value, complex loans which appear to be outside normal commercial lending practices".
Yesterday, Agnew confirmed that at least some of the loans were to companies related to Five Star Consumer Finance by way of common directors. The matter had now been referred to the Register of Companies.
"It's up to them to take all that further."
Meanwhile, in his first report on Five Star Finance, Burgess said he had been in communication with the Securities Commission and expected "further involvement by them, as well as other regulatory authorities".
MacDonald, Kirk and Bowden are also the directors and controlling shareholders of Five Star Consumer Finance's parent company Antares Finance Holdings, which is still trading.
