Investors in failed St Kilda Finance - which owes almost $7 million - could at "worst" get less than 50% of their original capital back, according to the receivers, BDO Spicers, of Christchurch.
All Purpose Finance, which traded as St Kilda Finance, was placed in the hands of receivers in mid-November by its directors, owing almost $6.93 million to 358, mainly southern, secured investors.
St Kilda succumbed to the same fate as dozens of other finance companies over the past two years.
Its reinvestment rates plummeted from 65% to 15% as investors shied away from higher-risk investments, forcing many into moratorium or receivership and tying up an estimated $4 billion of investors' funds.
Following criticism from a Central Otago-based investor, upset by the lack of information from receivers since mid-November, BDO last week mailed out a "preliminary review" of St Kilda's assets, of which the Otago Daily Times has obtained a copy.
The BDO report says depositors could recover 45% to 80% of their original investment, noting it was unlikely any interest would be paid.
"We are mindful of the broad range of potential recoveries for debenture investors, but given the considerable uncertainties relating to the recoverability of the property loans made by the company, we consider at this time the [45% to 80%] range to be appropriate," BDO joint receiver Stephen Tubbs wrote to investors.
He said investors would "appreciate" the effects of the deteriorating property market, which was expected "to have a major impact on the recoveries to secured investors".
St Kilda's main asset was its loan book, with $9.6 million lent out, which is "largely" secured by second mortgages to New Zealand borrowers.
The Central Otago investor, who asked to remain anonymous, believed that to date the BDO receivers had "not been able to have a complete understanding of the activities of the business" and that the time taken to prepare a business summary suggested understanding of the loan book and "related activities" was incomplete.
Mr Tubbs said in the best-case scenario, of the $9.6-million loan book, investors would get 80c in the dollar, or a total $5.52 million. .
However, in the worst case, $3.1 million would be realised, representing 45c in the dollar.
The Central Otago investor warned "some investors are . . . concerned and are seeking professional advice in respect of the accountability of the directors, trustees and company management".
Mr Tubbs said: "We have not, as yet, independently verified all the information supplies upon which the [preliminary review] analysis is based."
St Kilda's chairman, John Farry, said last month the global credit crunch had diminished the values of land and building securities and cautioned that selling up and refinancing the loans would be difficult.
As the company was in the hands of receivers, he said he could not comment on likely investor outcomes or the company's financial state.
Mr Tubbs said it was difficult to assess any timeframe for a payout, but if one settlement went ahead as expected on January 23, he anticipated $1.5 million could be available for distribution, equating to a 21c-in-the-dollar payment to investors by the end of this month.
BDO's first formal receivers' report is due out later this month.
