Geneva Finance has stopped repaying investors, owed more than $112 million, as it struggles to remain afloat.
The Auckland-based company plans to ask its 4500 investors to agree to a repayment moratorium of 612 months, as it tries to stabilise its position.
International credit rating agency Standard and Poor’s immediately dropped its long-term rating of Geneva to D from B-minus.
Geneva chief executive Shaun Riley said there had been a “serious erosion of confidence across the sector, which, coupled with the timing of continued announcements from Standard and Poor’s, has had a direct impact on Geneva”.
Five New Zealand finance companies have failed since August, and 10 in the past 17 months, leaving investors owed about $1.1 billion. After the latest collapses, many investors rushed to get their money out of finance companies.