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Beware the return of the asterisk

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  • Beware the return of the asterisk

    New opinion piece by Bernard Hickey from interest.co.nz

    Regular readers of advertisements for finance companies will remember the asterisk. It was often nestled next to the phrase "Secured Debenture".

    The small print would say the security was subject to any prior ranking and would sometimes say it was a security over property.

    We all now know the phrase "Secured Debenture" meant little. It could be a debenture which was down the rankings behind (as is always the case) the IRD and employee salaries, but also behind first mortgage holders, Fortress Credit Corp and a bank loan of some sort. The property may have been a hole in the ground near Queenstown or a bunch of used cars in South Auckland.

    Investors in Bridgecorp were promised a secured debenture. It turned out Rod Petricevic was paid his salary before investors got their money back. Fortress got their money out of MFS Pacific before debenture holders. Bank of Scotland will get their money back before debenture holders in Geneva Finance.

    Investors should be rightly aware of the asterisk and the small print.

    Now the asterisk is back and we should all be a little afraid.

    Read more...

    Cheers

    Marc
    Free business resources - www.BusinessBlogsHub.com

  • #2
    Thanks Marc, Bickey may be seen by some as an idiot. No further comment.

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