New Zealand's South Canterbury Finance (SCF) has collapsed after it failed in its attempts to recapitalize.

The troubled lender had a deadline of the end of August to secure new capital, or face the threat of receivership.

SCF owes approximately $1.2bn to investors, mostly lent on to small businesses and farmers. Under a government-backed retail deposit guarantee scheme, investors’ money, including interest due, is protected despite the company’s failure.

Kerryn Downey and William Black of the advisory firm McGrathNicol were appointed receivers and managers of SCF and its charging subsidiaries by Trustees Executors as Trustee pursuant to the trust deed dated 12 April 1976.

On appointment, the receivers have taken possession and control of all of the assets and undertakings of the SCF Group.

Over the next few weeks the receivers will be working with senior management to review the status of the companies and the immediate priorities, and to assess the various initiatives undertaken by senior management to restructure the companies’ affairs.