The misery of South Canterbury Finance (SCF) has worsened with many of its wealthy investors taking out their money so as to secure it under Government's deposit guarantee scheme.

The failure of SCF, the Timaru-based finance Company, was announced on Tuesday and the Company started disbursing $NZ1.6 billion to 35,000 depositors and lenders. The Government will help out the collapsed entity by selling off a business worth $NZ900 million.

As per the modified scheme, the new limit set for the secured amount is $NZ250,000, which will be applicable from October 12. The current limit for each investor is $NZ1 million.

"Many investors with deposits above the $NZ250,000 ($A196,517.71) limit in SCF had been rearranging their investments to get below that figure ahead of the deadline”, said Trustee Executors Regional Manager, Yogesh Mody.

He added that such an attempt by big investors signalled that they were losing faith in the Company to reinvest or invest larger amounts this year.

As reported by a source to The New Zealand Herald, Sandy Maier, Chief Executive of SCF, may sell the business of South Canterbury Finance Ltd. to Permanent Investments Ltd., whom he witnessed going through a document containing the sale price of SCF as $2.65 a share or $NZ1.57 billion.