Insurers will pay $NZ18.9 million ($17.76 million) from a directors’ and officers’ (D&O) policy to the receiver of failed New Zealand finance company Bridgecorp.

Last week receiver PricewaterhouseCoopers and regulator the Financial Markets Authority (FMA) reached a settlement with the Bridgecorp directors and their insurers relating to the receiver’s civil claim against the directors for breach of duties.

The receiver will not confirm the insurers involved, but the settlement was made possible by December’s Supreme Court decision on access to a $NZ20 million ($18.89 million) D&O policy with QBE.

The Bridgecorp failure threw the D&O market into turmoil in 2011, when New Zealand’s High Court upheld the receiver’s claim to the policy proceeds, meaning company directors and executives could not assume their insurance would be available to pay defence costs.

The decision was thrown out on appeal but upheld by the country’s highest court in December.

Australian courts have so far rejected the Bridgecorp reasoning, but a test case over failed plantation company Great Southern may be heading to the High Court.

The FMA will discontinue its civil action against the Bridgecorp directors, because they have limited personal assets and it would be a waste of taxpayers’ money to continue.

Last week’s settlement will enable a distribution to secured investors of NZ4 cents in the dollar on top of NZ8 cents already paid.

The total recovery will be $NZ55 million ($51.69 million).

Bridgecorp collapsed in 2007, owing 14,500 investors $NZ459 million ($431.41 million).