History
Mark Hotchin and business partner Eric Watson boughtStart of decline 2008
As a result of the continuing worsening global financial crisis in July 2008 Hanover Finance and United Finance froze repayments of NZ$554 million owed to 36,500 investors. After a vote over 85% of investors agreed to a debt repayment plan for the return of their capital over a 5-year time scale, predicated on the recovery of the New Zealand property market. Hotchin and Watson pledged a property, benefits and cash package worth up to $96m to investors as part of the deal. By November 2009 accountancy firm PwC estimated that the package had fallen in value to between $36 million and $56 million, due to a fall in property prices. Over the first year of the debt repayment plan, six cents in the dollar was repaid to investors, however the property market had continued to worsen and it appeared the company was heading for receivership. In 2009 Hanover was approached by Allied Farmers to buy the assets of Hanover Finance and United Finance, effectively held in limbo by the repayment plan. In December 2009 Hanover Group debenture holders, note holders and bond holders were given another opportunity to vote for receivership or for the new plan with Allied. 75% voted in favour of swapping their debentures, notes and bonds for shares in Allied Farmers Limited. This transaction resulted in Allied Farmers assuming the net asset position of the Hanover Group finance companies.Failure
Allied Farmers put their finance company Allied Nationwide into receivership on 20 August 2010 and as at March 2011 shares in were worth only a fraction of what they were traded for.Aftermath
In late December 2011, the Financial Markets Authority (FMA) announced that it proposed to file civil proceedings against the directors and promoters of Hanover Finance Limited and other companies relating to statements made in the December 2007 prospectuses and subsequent advertisements. As a result of the FMA's announcement former Hanover Finance's chairman Greg Muir issued a media statement saying that "the FMA investigators were given a substantial amount of evidence demonstrating that the directors conducted themselves responsibly, with appropriate rigour, and made judgments they believed were in the best interests of the company and its investors on the information available to them at the time." In December 2012, the remaining property assets of Hanover and United Finance (with a book value of $13.5 million) were transferred from Allied Farmers to Crown Asset Management, the entity set up to hold assets from failed finance companies backed by the Government's deposit guarantee.See also
*References
{{reflist, 2 Financial services companies established in 1999 Financial services companies disestablished in 2010 Financial services companies of New Zealand Defunct companies of New Zealand Companies based in Auckland 2010 disestablishments in New Zealand New Zealand companies established in 1999